Trade gap widens by 62.7% in 5 years
Malawi’s trade deficit—the amount by which the cost of imports exceeds the value of exports—widened by 62.7 percent between 2016 and 2020 to -$1.9 billion, figures from the International Trade Centre (ITC) Trade Map have shown.
According to the ITC figures, the country’s trade deficit continues to rise each passing year.
For example in 2016 Malawi’s trade deficit was recorded at -$1.1 billion which rose to -$1.6 billion in 2017 and -$1.8 billion in 2018.
The trade deficit reached an all-time high in 2019 when it was recorded at -$2 billion.
In 2020, alone top five countries with a yawning trade deficit against Malawi included South Africa at -$512.5 million, China at -$407.8 million, United Arab Emirates at -$259.2 million, Zambia at -$93.1 million and United Kingdom at -$78.4 million.
Commenting on the development, economist Thomson Kumwenda said Malawi has been exporting 67 percent in raw materials, 19 percent in intermediate or partially processed goods and three percent in capital goods and has been importing 95 percent in finished and intermediated good and 3.6 in raw materials.
He said, by and large the country is a hugely importing nation but worse still is the fact that its major exports are unprocessed goods mainly of agricultural nature.
“The trade deficit results from the use of Malawi as a ‘market of last resort’ for exports from around the world, and from several macroeconomic problems. Both kinds of problems can and should be addressed with new trade and international policies,” Kumwenda said.
In a separate interview, international trade expert Unkhankhu Ng’oma reiterated the need for the country to diversify the economy and the agriculture sector.
