Malawi exports face poor demand
Demand for Malawi’s key exports has deteriorated due to slow growth in developed markets and an economic downturn in sub-Saharan Africa, the World Bank has said.
The bank estimated that the exports will slump by 10 percent in 2015 to $1.58 billion, compared to $ 1.75 billion worth of exports in 2014.
A sluggish performance in exports as projected by the bank comes at a time when the country’s trade gap or the gap between imports and exports is currently wide, estimated at over $1.5 billion, one of the world’s worst trade gap, according to the World Trade Organisation (WTO) figures.
According to the World Bank publication on Malawi, the Malawi Economic Monitor, recession in South Africa which is traditionally Malawi’s largest trading partner, has dampened the prospects for Malawi’s exports.
In general, the World Bank has said production of most export crops in Malawi has proved to be relatively resilient compared to food crops.
“However, even where output has been relatively stable, softer global agricultural commodity prices have resulted in deterioration in the value of total earnings,” says the bank.
In aggregate terms, World Bank observes that the decline in global commodity prices has had some positive effects on Malawi’s external account, given that Malawi is a net oil importing nation.
While a weaker kwacha helps boost export earnings in nominal terms, World Bank assesses that the depreciation which occurred in July and August 2015 came late in the agricultural season; hence, had limited impact on export growth.
However, while the bank expects the value of exports to decline in 2015, on one hand, the institution also sees Malawi’s current account deficit narrowing in 2015 as import fall.
It is expected by the bank that total imports in 2015 will fall by some 11.9 percent on an annual basis, with imports dropping from $2.39 billion in 2014 to $2.10 billion in 2015.
But Ministry of Trade and Industry spokesperson Wiskes Nkombezi is upbeat that Malawi can boost exports in 2016, saying the ministry is putting in place instruments which will enhance access to and cost of finance for small and medium enterprises (SMEs). n
