distribution, finance, construction and manufacturing. The headline data on trade also shows an equivalent change in dynamic: whilst exports have stayed within the region of 20 percent of GDP, the trade deficit has significantly worsened and since 2003 has exceeded 10 percent of GDP.

**Table 1: GDP and sources of growth**

||**95**|**96**|**97**|**98**|**99**|**00**|**01**|**02**|**03**|**04**|**05**|**06**|**07**|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|**National Account ($US m)**<br>||||||||||||||
|GDP ($US m)<br>|1,925|3,149|3,669|2,451|2,447|2,402|2,365|2,665|2,425|2,625|2,755|2,917|3,324|
|Exports, fob ($US m)<br>|444|510|539|539|447|402|427|414|433|499|509|543|706|
|Imports, fob ($US m)|508|588|697|497|573|460|471|595|684|810|1,006|1,055|1,182|
|**Trade ratios (as percentage of**|**GDP)**|||||||||||||
|Exports (fob)|23.1|16.2|14.7|22.0|18.3|16.7|18.0|15.5|17.9|19.0|18.5|18.6|21.2|
|Imports (fob)|26.4|18.7|19.0|20.3|23.4|19.2|19.9|22.3|28.2|30.9|36.5|36.2|35.6|
|Trade balance|-3.3|-2.5|-4.3|1.7|-5.1|-2.4|-1.9|-6.8|-10.3|-11.8|-18.0|-17.6|-14.3|
|**Growth in GDP (factor cost)**|**13.8**|**10.0**|**6.6**|**3.0**|**1.6**|**0.8**|**-3.9**|**1.9**|**3.9**|**5.1**|**2.2**|**8.6**|**9.2**|
|Agriculture|9.8|7.8|0.0|5.3|1.6|2.0|-2.4|1.0|2.3|1.1|-3.5|4.3|3.5|
|Mining, quarrying|0.0|1.5|-0.4|0.1|0.0|0.1|0.1|-0.6|0.2|0.5|0.8|-0.5|0.0|
|Manufacturing|0.9|-0.1|0.1|0.2|0.2|-0.4|-1.8|0.0|0.4|0.8|0.9|0.7|1.0|
|Electricity, water|0.0|0.0|0.1|0.1|0.0|0.1|-0.1|0.1|0.0|0.1|0.1|0.1|0.1|
|Construction|0.1|0.2|0.1|0.0|0.3|0.0|-0.1|0.3|0.3|0.3|0.4|0.4|0.9|
|Distribution|0.6|-0.2|3.7|-1.6|-0.4|-0.1|0.2|0.3|-0.2|1.4|2.8|1.8|1.3|
|Transport, communications|0.9|-0.4|0.4|0.0|0.2|-0.2|0.1|0.6|0.4|0.4|0.5|0.4|1.3|
|Financial, professional|0.7|1.3|2.5|-0.7|0.0|0.2|-0.2|0.5|0.5|0.8|0.7|1.7|1.1|
|Ownership of dwellings|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.0|0.1|0.1|0.0|
|Government services|1.0|-0.3|0.2|-0.5|-0.2|-1.0|0.1|0.0|0.2|0.2|0.1|0.3|0.6|

_Source: NSO 1994 series of accounts. GDP is from 2002 series back-adjusted using the 1994 series rates of growth._

# **Maize Production**

Agricultural production and policy is dominated by maize. Although there has been some diversification and a notable increase in smallholder tobacco production, the area under maize cultivation is still roughly equivalent to that of all other crops combined. Over 60 percent of national calorie consumption derives from maize; 97 percent of farmers grow maize; and over half of households grow no other crop<sup>4</sup> . Given Malawi’s vulnerability to drought, the maize harvest is thus central to the welfare of the population, and one of the most important political and social variables. This is reflected by the prominence of food security in public policy. Through the Fertilizer Subsidy Program, the government has made increasing maize yields the mainstay of agricultural policy, and has designated it a “strategic crop” subject to import and export bans (more recently intervening to set the domestic price). Together with good rains, the increased use of fertilizer has increased yields and in the last three seasons has substantially strengthened food security. Given the prominence of maize production in the national dialogue, it seems a reasonable hypothesis that the maize harvest has had a large impact on GDP.

Yet despite the prevailing assumption of the centrality of maize in the economy, the maize harvest drives volatility but does not dominate growth. The per-capita maize harvest is plotted alongside GDP<sup>5</sup> in Figure 5. Following the end of UNFAO monitoring

> 4 Integrated Household Survey, 2005 and Poverty and Vulnerability Assessment, World Bank, 2006.

> 5 The comparison of production weight against value-added is justified here since this series of National Accounts uses fixed baseline prices to construct GDP.

- 8 -