Malawi’s trade balance—the difference between the value of imports and its exports—improved in the first quarter as global trade has declined in view of the Covid-19 pandemic, the Reserve Bank of Malawi (RBM) figures show.
The figures contained in the RBM first quarter (January to March) Financial and Economic Review show that trade balance during the review period improved to $-369.8 million (about K269 billion).
This is compared to the higher trade balance recorded in the previous quarter (October to December) in 2019 at $-447.5 million (K326 billion).
The report says the trade account deficit narrowed as both exports and imports contracted on the back of weaker demand.
It further shows that exports were estimated at $128.3 million (about K93 billion) in the first quarter (Q1), a 58.2 percent drop from $306 .7 million (K223 billion) traded in the preceding quarter.
On the other hand, imports were estimated at $498.1 million (K363 billion) in the review quarter, a 36.5 percent reduction from $784.2 million (K572 billion) estimated in the previous quarter.
Reads the report: “The decrease in exports was attributed to a seasonal reduction in agricultural export commodities and a decline in global demand as a result of the Covid-19 pandemic.
“On the other hand, the reduction of imports is attributed to reduced global trade as countries started closing up to fight the Covid-19.”
Malawi’s economy is mostly affected by external economic developments, which experts partly blame on trade imbalances as imports outweigh exports, a development which contributes to wider trade deficit.
Economic commentators have since projected that the situation would not be any different this year as imports and exports of essential as well as non-essential goods and services are likely to be under pressure as trade faces unprecedented measures to curb Covid-19.
University of Malawi economics professor Ben Kaluwa said in an interview on Monday the economy largely depends on external factors.
He said now that there are global disruptions in view of Covid-19, it would be difficult for the country to make meaningful exports and imports.
“It should, however, be noted that as imports are likely to be minimal as well in view of the same Covid-19 restrictions, chances are the deficit will indeed narrow, but still exports are expected to outweigh the imports,” he said.
Ministry of Industry and Trade spokesperson Mayeso Msokera, in an earlier interview, admitted that Covid-19 pandemic would affect volumes of trade between Malawi and its major trading partners that are adopting measures to mitigate the spread of the virus.
“Governments across the world have instituted travel bans, and as a consequence, this will certainly lead to a slowdown in business, which would definitely limit trade between Malawi and other countries,” he said.
Over the years, Malawi’s imports have been outweighing exports despite a number of interventions to reverse the trend.