Malawi’s cumulative trade deficit for the seven months to July has increased to $1.84 billion (about K3.2 trillion) and recorded the highest monthly shortfall in August, marking a deepening strain on the country’s external position.
Reserve Bank of Malawi (RBM) latest figures show that the August merchandise trade gap widened to $224.1 million (about K392.5 billion), the largest in over a year from $173 million (about K303.0 billion) the previous month.
The sharp deterioration means that by the end of August, the country’s trade gap had expanded to $1.84 billion from $1.4 billion (about K2.5 trillion) recorded during the same period in 2024.
The widening deficit was largely driven by a 15.4 percent rise in imports at $334.8 million (about K586.2 billion) compared to a 5.4 percent drop in exports to $110.7 million (about K193.7 billion).
The data shows that Malawi continues to spend heavily on fuel, fertiliser and cereals even as revenues from its top export commodities namely, tobacco, tea and groundnuts dropped sharply.
Economists have since warned that the worsening trade imbalance is tightening pressure on the country’s already fragile foreign exchange reserves, which declined to $521.9 million or 2.1 months of imports in August from $607.7 million, an equivalent to 2.4 months of imports in July.
In an interview, Mzuzu University economics lecturer Christopher Mbukwa said the rise in the deficit reflects both structural and transactional weaknesses in the economy.
He said: “The reason for the increased trade deficit is the drop in sales of tobacco, groundnuts and tea.
“I could attribute the rise in this deficit to the transactions that were done in kwacha this year as opposed to the traditional dollar transactions over the years. It is likely that these played a role in the rise of the trade deficit.”
Mbukwa observed that local-currency transactions in export settlements may have reduced Malawi’s ability to accumulate foreign exchange, worsening the external imbalance.
Scotland-based Malawian economist Velli Nyirongo said there is always a persistent mismatch between the country’s import needs and export capacity, signalling deep structural dependence.
“With limited diversification and low industrial output, the country remains vulnerable to seasonal export fluctuations and global price movements,” he said, adding that the situation could further undermine the kwacha’s stability and complicate efforts to rebuild reserves unless accompanied by deliberate measures to boost production, diversify exports and rationalise imports.
As the lean farming season approaches, the high import bill for fuel and fertiliser combined with falling export receipts signals tougher months ahead for both consumers and policymakers navigating Malawi’s fragile macroeconomic recovery.
In the report, tobacco export receipts dropped to $75.2 million (about K131.5 billion) in August from $86.6 million (about K151.6 billion) in July while groundnuts exports tumbled to $0.5 million (about K900 billion) compared to $2.2 million (K3.8 billion) the previous month.
Meanwhile, imports of fuel surged to $67.9 million (about K118.9 billion) from $49.2 million (about K86.1 billion) in July while fertiliser purchases more than doubled to $38.6 million (about K67.6 billion) as government and private buyers geared up for the upcoming farming season.
