Malawi’s imports to rise to K1.6 trillion
Malawi’s 2015 imports—for goods and services combined—are expected to rise to US$3.3 billion (K1.6 trillion), over twice the country’s exports, which shows that Malawians still have a strong appetite for foreign goods.
Compared to last year, the growth of imports is expected to rise more than the increase in exports, consequently worsening the country’s trade deficit and balance of payments position.
Available statistics provided by the Reserve Bank of Malawi (RBM) show that while total exports will this year grow by about 3.2 percent to $1.6 billion (K754 billion), the country’s imports will jump by about 6.8 percent, to $3.3 billion (K1.6 trillion), putting pressure on the local currency and supporting foreign jobs.
Although the government launched the National Export Strategy (NES) in 2012 and has been implementing the Buy Malawi Campaign, Malawians have still been importing goods and services including those that can locally be produced.
Against fears that Malawi will miss the International Monetary Fund (IMF) 5.8 percent GDP projections due to the recent floods, the Economist Intelligence Unit (EIU) has estimated that in 2015, agriculture, the country’s main export earner, will grow by 5.8 percent.
The manufacturing industry, on the other hand, will grow by 3.5 percent while services, which contribute more than half to the country’s total GDP, are tipped to grow by about 4.9 percent.
Leading Malawi’s imports, according to official figures, include fertilisers, petroleum products and furniture, while prominent exports include tobacco, sugar, tea, cotton and legumes.
Against a background of rising imports relative to exports, analysts have often pointed out that it is very appalling that Malawi is importing consumer goods instead of capital goods.
National Working Group on Trade Policy (NWGTP) chairperson, Geoff Mkandawire, noted that local products may not be competitive enough in terms of quality, standards and pricing, hence consumers resort to importing consumer goods.
However, Mkandawire cautioned that some Malawians are proud and have a tendency of buying imported goods regardless of their quality, pointing out that the country needs to work on changing people’s mindset.
Economists often warn that a worsening balance of payments position, the difference in total value between outgoing and incoming payments, may worsen living standards if the trade deficit is a symptom of a weakening domestic economy and a lack of international competitiveness.
They, however, argue that if the deficit is largely the consequence of supply-side economic weakness, then policies need to be effective in improving the cost and non-price competitiveness and in expanding the economy’s productive potential is essential.
