- The Economist Intelligence Unit (EIU) the research and analysis division of Economist Group, has forecast a widening current account deficit for Malawi largely due to a large merchandise trade deficit.
- The country depends heavily on fuel and capital imports.
- During the past decade, the current account deficit has been around 19 percent of gross domestic product.
The Economist Intelligence Unit (EIU) the research and analysis division of Economist Group, has forecast a widening current account deficit for Malawi largely due to a large merchandise trade deficit. The country depends heavily on fuel and capital imports. During the past decade, the current account deficit has been around 19 percent of gross domestic product.
In its latest brief the EIU has forecast a significant current account deficit between 2021 and 2025 despite the projected higher exports. It felt that though export earnings were expected to increase in 2021 and 2025 as a result of gradual recovery in external demand, import spending will also go up due to increasing inputs costs. However, the trade deficit is expected to narrow gradually as export growth outpaces rising import spending from 2021 with rise in economic growth as work commences on capital projects, particularly in the energy sector.EU estimates higher export volumes of agricultural products, mainly tea and soya beans and tobacco supported by higher global prices.
In its recent economic review, Bridgepath Capital Limited observed that the rise in the current account deficit remains an issue of concern as export earnings depend on a narrow basket of agricultural goods. It pointed out that tobacco, which has a 56 percent share in total exports, will continue to be impacted by demand shocks.
