Malawi’s goods trade balance deteriorated to a deficit of $507.6 million (K866.5 billion) in the first quarter of 2024, from a deficit of $495.8 million (K754.1 billion) in the fourth quarter of 2023, the latest Financial and Economic Review by the Reserve Bank of Malawi (RBM) has shown.
But the deficit was lower compared to a deficit of $598.0 million recorded in the first quarter of 2023.
According to RBM, the outturn was on account of a substantial drop in exports, reflective of the agricultural lean season that outweighed a decrease in imports also observed in the period.
In an interview yesterday Trade Minister Sosten Gwengwe said import substitution is the quickest way to solve the trade deficit issues.
“We are importing things that are locally produced for example cement and stuff,” Gwengwe said.
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Blantyre-based economist Marvin Banda said the trade balance is underpinned by cyclical nature of Malawi’s agribusiness cycle which usually sees a deterioration of good trade balance as a result of net effect of externalization of forex.
Banda said the country should aim to improve the interaction between imports and exports by improving the production and manufacturing sector which would as import substitution as well as surplus for exports.
“Increase tariffs for both imports and exports for goods that are comparatively advantageous to Malawi to protect its market position.
“Realignment of public revenue and expenditures to take advantage of price cycles of strategic commodities such as fertilizer which is cheapest mid-year,” Banda said.
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He further urged Capital Hill to consider diversification of public investment to include international investment which are resistant to currency slides. “Reduction of government expenditure which crowds out the private sector from access to forex which then starve production,” Banda said.
