Malawi’s trade deficit widened by 23.3 percent in the first half of 2025, reaching $1.43 billion from $1.16 billion recorded during the corresponding period last year.
This is according to Nico Asset Managers Mid- Year Economic Report for 2025.
According to the report, the growing imbalance was primarily driven by imports, which rose by 20.4 percent to $1.71 billion from $1.42 billion in the first half of 2024.
It notes that exports also increased but at a slower pace, rising by 7.7 percent to $0.28 billion from $0.26 billion, insufficient to offset the surge in imports.
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“Total exports surged to $73.5 million in June 2025, up 112.5 percent from $34.6 million in May, driven by strong export performance across several sectors. Meanwhile, total imports declined slightly to $311.5 million, down one percent from $314.8 million the previous month.
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“Consequently, the trade deficit narrowed by 15.1 percent to $237.9 million in June from $280.0 million in May 2025, reflecting the combined effect of rising exports and modestly lower imports,” the report says.
The portfolio management and advisory firm adds that the persistent expansion of the trade deficit highlights Malawi’s dependence on key imports such as refined petroleum products, fertiliser and industrial machinery, which are vital for domestic consumption and economic development.
“Meanwhile, the export earnings continue to be dominated by agricultural commodities such as tobacco, tea and sugar. The widening trade gap reflects ongoing challenges in boosting export diversification and domestic production, which could help reduce vulnerability to external shocks and strengthen Malawi’s economic resilience.
“However, Malawi’s import requirements, primarily for fuel, food and manufactured goods, will remain substantial. The primary income account deficit will remain large but is expected to narrow slightly over the forecast period as debt restructuring eases the external debt-repayment schedule,” Nico says.
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The firm says a widening current account deficit will continue to exert further downward pressure on the Kwacha against currencies of Malawi’s trading partners.
It says Malawi will need to improve its competitiveness and diversify its export base to improve its trade position.
In its latest Malawi Economic Monitor, the World Bank said Malawi’s trade deficit is expected to widen to $2.3 billion this year as imports continue to outpace exports.
The bank projects Malawi’s exports to reach $1.79 billion in 2025, up from $1.4 billion recorded in 2024.
However, imports are forecast to surge to $4 billion, creating a substantial gap in the country’s trade balance.
The report shows that Malawi’s trade performance weakened in 2024, with total exports, including goods and services, declining to $1.4 billion from $1.56 billion in 2023.
