By Kingsley Jassi:
Malawi’s trade deficit for the first quarter of 2025 has widened to $533 million from $507 million recorded during the same period last year, according to the National Statistical Office (NSO).
Cumulative monthly figures from NSO reveal that between January and March, the country’s exports amounted to $189.6 million against imports of approximately $720 million, resulting in the increased deficit.
The NSO trade bulletin for March indicates that imports rose by 13 percent to $264.8 million compared to the same month last year, while exports plummeted by 37.6 percent to just $30 million.
“Meanwhile, the trade deficit widened by 26.8 percent from $193.3 million in March 2024 to $234.8 million in March 2025. With the export-to-import ratio of 0.1, the total exports were equivalent to 10 percent of total imports value in March 2025,” NSO’s monthly update shows.
Trade expert Fredrick Changaya warns that Malawi’s terms of trade will continue to deteriorate if foreign exchange shortages persist, hampering the business sector’s productivity through limited capacity to import raw materials.
Changaya criticised the Reserve Bank’s demand-side policy approach, arguing that the problem stems from the supply side.
“The economy suffers from low productivity and hence low output. We therefore require loosening the economy with low interest rates. The policy framework requires innovation especially around assumptions and normalisation of variables,” Changaya said.
Economist Velli Nyirongo noted that declining exports suggest weakening competitiveness in international markets, possibly due to supply-side constraints or reduced global demand for domestic goods.
“The significant rise in imports highlights an increasing dependence on foreign goods, potentially driven by production shortfalls or growing domestic demand for imported commodities. The widening trade deficit presents a serious economic risk, putting pressure on foreign exchange reserves and increasing the likelihood of currency depreciation, inflationary pressures, and higher external borrowing,” Nyirongo explained.
Malawi’s trade performance has been declining for years due to low agricultural production affected by weather shocks and rising input costs. Authorities had anticipated a recovery this year with projected economic growth of 3.2 percent, but some areas suffered drought later in the growing season.
Second-round crop estimates now indicate another food deficit, with maize production 20 percent below annual requirements.
