Trade deficit seen at $161.8 million in the last quarter
Recent figures from the Reserve Bank of Malawi (RBM) show that Malawi’s trade deficit widened in the last quarter of 2022 to $161.8 million compared to a surplus of $18.7 million recorded during the preceding quarter.
The 2022 Q4 trade deficit is, however, lower than a trade $536.5 million deficit during the corresponding period in 2021.
According to the central bank, the outturn was explained by a 67.3 percent rise in imports to $487.6 million, which outweighed the impact of a 5.0 percent growth in exports to $325.8 million during the same period.
The increase in imports was driven by high demand for fertilisers as Malawi entered the agricultural production season.
The central bank warned that as the lean period continues to advance during the first quarter of 2023, exports could fall short of the financing demand for imports, such that the trade deficit could deteriorate.
Preliminary figures from National Statistical Office also reveal that, in December 2022 alone, the merchandise trade balance worsened to minus $32.9 million from minus $2.9 million in November 2022, and compared to a deficit of minus $203.6 million in the corresponding month of 2021.
The outturn during the month under review was on account of a 53.4 percent drop in exports that outweighed a 26.3 percent decline in imports.
During the month under review, exports decreased to $52.9 from $113.5 million recorded in November 2022 and compared to $58.8 million recorded in December 2021.
The outturn in December 2022 was explained by reduction in exports of tobacco, tea and coffee and pulses and oil seeds to $30.1 million, $3.2 million and $3.4 million from $50.6 million, $8.4 million and $3.9 million, respectively.
However, exports of sugar grew by 92.7 percent to $0.1 million in the review period.
Meanwhile, imports also fell to $85.8 million from $116.4 million registered in November 2022 and compared to $262.4 million registered in the corresponding month of 2021.
The outcome was as a result of a downturn in purchases of fertilisers and fuels to $23.9 million and $17.2 million in December 2022 from $46.0 million and $22.1 million in November 2022, respectively.
On the other hand, imports of vehicles and pharmaceuticals increased by 29.2 percent and 15.6 percent to $12.3 million and $15.3 million from $9.5 million and $13.3 million, respectively.
Minister of Trade and Industry Simplex Chithyola Banda is on record to have said the country needs to boost its industrialisation drive as a way of cutting unnecessary imports while propelling exports.
He expressed concern over the widening trade gap due to, among other things, the country’s insatiable appetite for imports coupled with low capacity to produce export commodities.
Industry captains have been calling on the government to work towards addressing bottlenecks to doing business including high cost of borrowing, elevated inflation, forex scarcity and persistent power outages, among other things, if they are to be effective and efficient.
In an interview last week, Malawi Confederation of Chambers of Commerce and Industry Chief Executive Officer Chancellor Kaferepanjira said industry players need a push from the government if they are to be competitive.
“There is a need for handholding by the government. This is why the country has been crying for a return of something like the Malawi Development Corporation. This is what happens all over the world.
“There is a need for the government to be deliberate about it and work toward creating generators of foreign exchange and do its part,” Kaferapanjira said.