Malawi’s trade balance widens in Q4—report
Malawi’s trade balance widened by $126 million (about K103.6 billion) in the fourth quarter (Q4) of 2021 as exports outweighed imports, figures from Reserve Bank of Malawi (RBM) show.
The data, contained in the first RBM Monetary Policy Committee Statement for 2022 issued on Thursday, said the trade deficit, the gap between the monetary value of a nation’s exports and imports, widened to $610 million (about K494.1 billion) from a deficit of $484 million (about K392 billion) in the preceding quarter.
RBM said the development was seasonally expected as quantity of traditional exports such as tobacco, sugar and tea declined during Q4 of the year while imports increased during the same period due to imports of farm inputs.
Reads the report in part: “Consequently, exports declined to $260.3 million [about K210.6 billion] during Q4 from $338.4 million [about K273.7 billion] in Q3 while imports increased to $870.6 million [about K704.7 billion] from the previous quarter’s position of $822.4 million [about K655.8 billion].”
Malawi’s economy is largely affected by external economic developments which experts partly blame on trade imbalances as imports outweigh exports, a development which contributes to economic vulnerability.
In addition, in Malawi agricultural products continue to dominate Malawi’s export basket accounting for about 80 percent of Malawi’s export basket, as such, the country’s exports also depend on seasonality factors.
University of Malawi’s professor of economics Ben Kaluwa said it will be hard for Malawi to narrow trade balance because of the nature of commodities the country relies on for the export market.
He said the trade balance issue is a long-term trend, which the country can improve if it only reduces imports by investing in local production of some ‘petty’ goods that the country imports.
Kaluwa said: “The country is having difficulties narrowing the trade balance because of what we depend on as exports.
“Most of these commodities are seasonal and once in off-season, the trade balance does widen as we see the case presently.”
Economics Association of Malawi president Lauryn Nyasulu earlier urged authorities to ensure the country addresses underlying structural constraints in the economy to improve exports.
Ministry of Industry and Trade spokesperson Mayeso Msokera is on recorded as having said that trade balance has become an issue of concern, but government continues to implement policies and strategies to narrow the trade gap.
