Despite Malawi’s imports being higher than exports in 2016, data from a government annual economic report shows a narrowing trade deficit. This means that the country’s exports were on a steady rise in the year.
The report, which is prepared by the Ministry of Finance, Economic Planning and Development, indicates that while imports declined by 10.5 percent from K1.1 billion in 2015 to K1 billion in 2016, exports jumped by 31.7 percent.
According to the report, improvement of commodity prices on the international market and increase in production of commodities, such as sugar and tea, is expected to grow exports further by 3.1 percent in 2017.
However, this is despite reduced export value of tobacco, the country’s main export commodity, which is expected to decline from $750 million (about K549 billion) in 2016 to $648.3 million (K475 billion) in 2017.
Malawi’s trade deficit-a negative balance of trade in which a country’s imports exceed its exports-has been widening over the years despite various policy interventions to narrow the gap.
Some of the policies and interventions in key
areas in support of trade, industry and private sector, include National Investment Policy, National Export Strategy (NES), an updated micro small and medium enterprise (MSME) policy and the Buy Malawi Strategy.
In an interview, Ministry of Industry, Trade and Tourism spokesperson Wiskes Nkombezi expressed optimism on the narrowing trade deficit further, attributing it to good economic outlook this year.
“We expect that food imports will go down and exports will pick up. However, the ministry will continue working on facilitating growth of non-food products as well as to improve our trade balance,” he said.
However, World Bank senior country economist Richard Record said although tobacco exports are expected to decline due to a fall in tobacco production in 2017, overall export earnings are expected to improve modestly due to the rebound in the agricultural sector following favourable rains and a slight increase in international commodity prices.
“In 2017, although an overall decline in tobacco production is expected, the decline in exports is projected to be less pronounced. Tobacco exports are projected to decline by around 27.6 percent while overall production is projected to decline by 36 percent.
“Although prices are expected to improve due to the undersupply and to the increase in international prices, the fall in the volume of exports is expected to more than balance the impact of this, thus leading to an overall decrease in the value of tobacco exported,” he said.
Agricultural products continue to dominate Malawi’s export basket, accounting for about 80 percent of the exports.
Most other sectors remain in infancy as tobacco, sugar, coffee and tea constitute the largest export basket for the economy.