Key Business Points
- Trade deficit is projected to narrow by 24.7 percent in early 2026 due to stronger exports and weaker imports.
- Experts recommend accelerating high-value mining projects and adding value to raw exports to sustain forex gains.
- The trade gap remains wide, with tobacco over-dependence and low export diversity limiting long-term growth.
Malawi’s trade deficit is on track for a notable improvement in the first quarter of 2026. According to the Reserve Bank of Malawi (RBM) first Monetary Policy Report for 2026, the current account deficit is forecast to shrink from $533.4 million in late 2025 to $427.6 million in early 2026. This improvement follows an uptick in secondary income and better export performance observed in February.
The National Statistical Office (NSO) preliminary merchandise trade report adds weight to these projections. February 2026 saw exports surge 98.3 percent from a year earlier to $64.6 million, while imports fell by five percent to $279.1 million. This cooled the monthly trade deficit to $214.5 million, down 17.8 percent year-on-year.
Despite the welcome short-term relief, analysts caution that this trend can be a double-edged sword. Trade expert Paul Kwengwere notes that Malawi’s manufacturing and agriculture depend heavily on imported raw materials. To keep this momentum going, he recommends focusing on fast-yielding projects such as the Kayelekera Uranium and Kasiya Rutile/Graphite mines, which can provide more stable, year-round foreign exchange compared to seasonal crops. He also advises shifting from exporting raw products like soya and cotton to refined goods such as cooking oil and textiles, improving the value per kilogramme and multiplying forex earnings without needing more land. "Accelerate fast yielding projects like Kayelekera Uranium, Kasiya Rutile/Graphite to diversify away from tobacco," he said. "Make fertilizer locally," he added, calling for organic fertiliser plant investment.
University of Malawi economics lecturer Edward Leman says the trade gap remains high largely because of Malawi’s over-reliance on tobacco and limited export diversification. Mzuzu University economics lecturer Christopher Mbukwa also points to structural and transactional weaknesses in the economy. Among his concerns is the decline in exports of tobacco, groundnuts and tea, as well as a shift from dollar-based export transactions to kwacha-denominated ones.
The Ministry of Industrialisation, Business, Trade and Tourism says the recent movement in trade terms aligns with National Export Strategy II (NES II), launched in 2021 to improve export competitiveness and diversity beyond traditional crops like tobacco and tea. The strategy seeks to increase the share of ‘Made-in-Malawi’ goods in regional markets and boost overall export readiness.
While the projected narrowing of the trade deficit is encouraging, sustaining it will require consistent focus on value addition, import substitution and non-traditional export sectors. Entrepreneurs and investors may find opportunities in sectors where Malawi can move up the value chain and achieve more stable forex inflows.
The projected narrowing of the trade deficit is a welcome signal, but the path to sustainable economic resilience lies in diversification, value addition and strategic investment in high-return sectors.
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