Malawi’s trade deficit continued to widen in June largely due to weak exports amid rising imports, recent figures from the Reserve Bank of Malawi (RBM) show.
In its monthly Economic Review, the RBM showed that, in June this year, the trade deficit stood at $160.8 million compared to a deficit of $57.9 million recorded in May 2023.
The figure is also way too higher than the $30.0 million trade gap registered in June 2022.
The widening trade deficit has been attributed to a 113.1 percent increase in imports, which outweighed a 31.9 percent rise in exports during the month under review.
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“Exports rose to $61.0 million during the month under review, from $46.3 million in May 2023, but were lower than $75.7 million realised in June 2022.
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“Similarly, imports surged to $221.9 million in June 2023 from $104.1 million in May 2023, and compared to $105.7 million in June 2022,” the report reads.
The report adds that the upturn in exports was largely supported by higher inflows of tobacco at $25.7 million, tea and coffee at $8.0 million, and sugar at $ $7.5 million.
Increase in imports was partly on account of relatively high payments for imports of $12.7 million for vehicles, $8.9 million for pharmaceuticals and $13.1 million for fertiliser.
In an interview last year, Financial Market Dealers Association President Leslie Fatch said to narrow the gap, the country needs to work towards import substitution.
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He said Malawi should strive to diversify its export base beyond relying on tobacco alone.
“We have said several times that we need to stop this overreliance on tobacco and find other exports that can help us narrow the trade deficit; otherwise, the trend will continue,” Fatch said.
Minister of Trade and Industry Simplex Chithyola Banda said the government is working on widening the export base.
“We are exploring means of increasing our export base so that we increase foreign earnings,” the minister said.
Malawi remains a predominantly importing nation.
It has lately been faced with an acute shortage of forex due to prevailing mismatches between demand and supply.
Among other interventions, the country is banking on the National Export Strategy in attempting to diversify products and enhance industrial development through manufacturing of value-added products for exports.
