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Trade deficit narrowed by 5.4% in 2019—report

Malawi’s trade deficit narrowed by 5.4 percent in 2019 as exports outweighed imports, figures from Malawi Government 2020 Annual Economic Report shows.

The report, which is prepared by the Ministry of Finance, Economic Planning and Development, indicates that in 2019, exports grew by 16 percent to $1.187 billion (about K878.38 billion) up from $1.021 billion (about K755.54 billion) in 2018.

On the other hand, imports slightly grew by two percent from $2.827 billion (about K2.08 trillion) to $2.895 billion (about K2.14 trillion).

The report shows that negative merchandise trade balance kept easing for four successive quarters from the fourth quarter of 2018 through the third quarter of 2019.

Tobacco is Malawi’s main export crop

In the first quarter of 2019, Malawi’s trade deficit stood at $454 million (about K335.9 billion), an improvement from the previous quarter’s $470 million (about K347.80 billion) despite the agricultural lean season weighing down exports in the quarter.

Reads in part the report: “In the second quarter of 2019, a rise in sugar exports saw exports picking up from the previous quarter. Despite a corresponding increase in imports, trade deficit experienced a 10 percentage point improvement in the second quarter.

“Seasonal uptick in agricultural export commodities in the third quarter saw continued improvement in export figures.”

Malawi’s wide trade deficit—the difference between imports and exports—has been a norm where imports outweigh exports despite the country having various trade policy interventions to narrow the gap.

This notwithstanding, the sector continues to face challenges, including unstable supply of tradable goods from the agricultural sector due to production shocks such as climate change and unpredictable policy measures such as export bans and licencing requirements which affect predictability of trade deals.

Ministry of Industry and Trade spokesperson Mayeso Msokera, in an interview on Wednesday, said government continues to implement policies and strategies to narrow the trade gap.

He said the main focus is to build the export readiness of Malawian exporters and develop regional and global value chains, promoting entrepreneurship with emphasis on micro, small and medium enterprises and addressing critical enablers related to exports such as energy, transport, market intelligence and trade facilitation.

Ben Kaluwa, who teaches economics at Chancellor College—a constituent college of the University of Malawi, said in interview the country’s economy largely depends on external factors and global disruptions due to the Covid-19 pandemic, would make it difficult to grow exports.

Figures from the National Statistical Office (NSO) and Ministry of Industry and Trade indicate that a basket of tobacco, tea, sugar, groundnuts, soya beans and soya bean extracts and residues, other dried legumes and macadamia nuts account for well over 80 percent of Malawi’s export products.

On the other hand, fuel and fertilisers remain key imports, accounting for about 80 percent of the import bill, according to NSO. 

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