Malawi closed the fourth-quarter of 2023 with a trade deficit of $495.7 million, about K842.6 billion, figures from the Reserve Bank of Malawi show.

Data contained in the October and December issues of the Monthly Economic Reports show that Malawi recorded a trade balance of $216.4 million (K368 billion) in December 2023, a deterioration from a shortfall of minus $147.4 million (K230 billion) reported in November 2023.

The trend shows a continuous improvement in the country’s trade balances throughout the year. The government closed the first quarter of 2023 with a trade deficit of $598 million but the deficits gradually declined to $555 million and $528 million in the second and third quarters, respectively.

Collectively, the country closed the year with a merchandise trade deficit of $2.17 billion or about K3.7 trillion. This is a marginal improvement from the K2.09 billion recorded in 2022.

Chakwera: This is progress, and we will build on it to keep our recovery going

In his State of the Nation Address presented before Parliament last week, President Lazarus Chakwera said the country’s trade position has improved because of the Commercial Agriculture and Export Strategy that his administration has implemented in recent years.

He said: “And if anyone thinks that our Export Strategy is not ticking, you can ask the Government of India and you will learn that exports from Malawi to India have increased 10 fold under my administration. This is progress, and we will build on it to keep our recovery going.”

In an earlier interview, Malawi Investment and Trade Centre (Mitc) chief executive officer Paul Kwengwere cautioned that if left unchecked, the perennial deficits could worsen the country’s current account deficits and pile pressure on the kwacha.

In a WhatsApp response, he said:  “What this means in the short term is that forex to finance imports will be in short supply but that can somehow be mitigated by borrowing. In the medium to long term, the borrowing will affect the development of the country due to the debt repayment burden [the country is currently in].”

The country’s deficits have resulted in protracted forex shortages that undermined the government from importing critical imports such as fertiliser, medicines and fuel.

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