Lowering imports narrows trade gap
Volume and value of goods the country imported in the first three months of 2022 went down substantially, leading to a contracted trade deficit.
This is according to Reserve Bank of Malawi (RBM) Monitory Policy Committee report released on Wednesday.
The report indicates that merchandise trade for the period resulted in a narrower deficit of $456.6 million than $610.3 million for the last quarter of 2021 and $465.7 million during the same period last year.
It adds that the outcome was due to a decrease of $224.2 million in imports to $646.4 million as compared to the $14.0 million fall in exports to $189.8 million during the period under review.
RBM reveals in the report that the decline in imports was most pronounced in fertilisers by 70.7 percent to $32.5 million, vehicles by 45.1 percent to $42.8 million, and petroleum products by 18.9 percent to $93.9 million.
Commenting on the development, economics expert Exley Silumbu said it was not surprising that the imports have dwindled and one factor is the seasonality of the economy.
Silumbu added that, apart from the seasonality, the global economy is still struggling to mend trade disruptions which came from the Covid pandemic and that Malawi is struggling with other economic factors.
“The pandemic distracted trade patterns which have disturbed supply of goods and the improved trade deficit must also be as a result of suppressed demand due to erratic availability of foreign currency lately,” Silumbu said.
Delivering the 2022- 23 National Budget Statement, Minister of Finance Sosten Gwengwe said, through the Ministry of Trade and Industry, the government will continue with implementation of programmes aimed at developing the country’s industrial sector and value addition to improve trade deficit.
Gwengwe added that, in the budget, government has allocated K3.5 billion for the development of Special Economic Zones or industrial parks in this country.
Malawi remains a predominantly importing and consuming nation, heavily reliant on exporting raw agricultural products with tobacco being the main export.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
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