The Reserve Bank of Malawi (RBM) says while the domestic tobacco prices rose in 2020, international prices for other key export commodities for Malawi, notably tea and sugar, have declined.
In its November 2020 Monetary Policy Report, RBM said during the year under review, tobacco averaged $1.53 (about K1 130) per kilogramme (kg) compared to $1.43 (about K1 065) per kg in 2019.
On the other hand, international prices for Malawi’s main imports, oil and fertilizer, have also tumbled.
Average prices of fertilizer have declined to $234 (about K174 000) per metric tonne (MT) in 2020 from $247.9 (about K183 000) per MT in 2019.
Similarly, oil prices have declined and are projected to average $41.7 (about K30 000) per barrel in 2020 from $61.4 (about K46 000) per barrel in 2019.
Reads the report in part: “The broad-based commodity price declines amidst the Covid-19 pandemic have resulted into neutral Terms of Trade for the country.
“Over the medium term, Malawi’s Terms of Trade growth is projected to remain neutral.”
RBM figures indicate that merchandise trade resulted in a deficit of $189.2 million (about K141 billion) in September 2020 compared to deficits of $230.9 million (about K172 billion) in August 2020 and $388.2 million (about K289 billion) recorded in a corresponding period in 2019.
The narrowing of the September 2020 trade deficit was largely a result of the decrease in imports which was more than that of exports.
Specifically, imports declined by 38.6 percent to $189.2 million (about K141 billion) in September 2020 which is larger than the 12.7 percent fall in exports to $67.5 million (about K50 billion).
In its October economic review report, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) head of membership development and communication Tione John Kafumbu recently said that the private sector fears that if trade imbalance is not addressed, the domestic economy could register further output losses than anticipated.
He said the private sector anticipated that economic activity would improve in the second half of 2020. However, looking at the current trajectory of events in the domestic economy and abroad, it is likely that output losses will be much worse than anticipated in April.