- June 7, 2016
- Posted by: admin
- Category: Macroeconomic Management
By Onelie Nkuna
2012
The study assesses the sustainability of the current account in Malawi using the structural approach. Results reveal that for Malawi’s current account to move towards a sustainable path, particular attention should be paid to the following factors; external debt, terms of trade, openness, real exchange rate, net foreign assets and growth. Furthermore, the current account deficit was excessively above the norm, deviating by an average of 5.0 percent during the study period. Based on the findings, the paper therefore recommends a policy paradigm shift to correct the deficits in Malawi. In this regard, policies that will ensure that the real exchange rates is not overvalued, growth is enhanced particularly in the export sector and also ensuring that external debt is sustainable will be key to ensuring sustainable current account. Furthermore, the paper recommends the use of this methodology to other MEFMI member countries.