By Benadetta Chiwanda Mia:
The country’s trade balance widened to -$653.1 million (about K1.1 trillion) between April and June 2024, from -$507.6 million (about K866 billion) in the first quarter, a Financial and Economic Review published by the Reserve Bank of Malawi (RBM) shows.
Trade balance is the difference between the monetary value of a country’s imports and exports over a given time period.
According to the review, the outcome stems from a significant increase in imports recorded compared to exports during the period under review.
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Malawi recorded an international trade deficit of minus -K318.4 billion in April 2024, before widening to K417.7 billion in May 2024 and narrowing to K407.8 in June this year.
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This represents an increase of 93 percent, 94 percent and 106.9 percent, respectively, compared to the same period in 2023, according to figures from the National Statistical Office.
In an interview, Minister of Trade and Industry Sosten Gwengwe said the country needs to move from low value exports of unprocessed agricultural products such as soya beans and groundnuts and start exporting high value exports such as processed agriculture products and mining to catch up with rising imports.
He has since disclosed that the government is advancing the Agriculture, Tourism and Mining (ATM) Strategy to boost exportation of high value products more especially mining products.
“You cannot expect the value of exporting pigeon peas and soya beans to match the importation of petrol and diesel. The goods that the country imports out of necessity comprise high value petroleum products, electronics, fertilisers and stuff, bought in US Dollars, and with the weakening of Kwacha, it’s problematic in as far as trade balances are concerned.
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“Mining is a critical aspect that can turn around our economy. What Malawi has of high value includes minerals under our soils and once imported those can now start matching the fertilisers and the petroleum products,” Gwengwe said.
President of the Economics Association of Malawi (Ecama), who is also a senior economics lecturer at the University of Malawi, Bertha Chikadza, said the widening trade gap is not unusual as it reflects a continued challenge of low exports and a consistently high import bill which has persisted for a very long time.
“This situation demands concerted efforts to increase quality production, add value, revamp declining industries and continuously review industrial policies,” Chikadza said.
Economic expert Edward Chilima described the widening trade deficit as an indication that interventions being implemented to boost production and import substitution are not yielding expected results.“If you look at the trend over the years, it is the same worrisome situation. We need to really manage our appetite for imports, and at the same time, promote interventions that are meant to substitute our imports to narrow the gap,” Chilima said.
