Rising Exports, Narrowing Deficits, and Strategic Growth to 2030

The East African Community (EAC) has demonstrated steady growth in international merchandise trade, reaching US$ 26.9 billion in Q1 2024—a 4% increase from the previous year—driven by a 12% rise in exports to US$ 11.3 billion and a slight 2% drop in imports to US$ 15.6 billion. This positive trend has helped reduce the trade deficit to US$ 4.2 billion, with major trade partners like China, UAE, and India contributing 45% of the region's trade volume. Projections to 2030 indicate sustained trade growth, potential export surpluses, and stronger intra-African trade, positioning the EAC as a vital player in the global market.

1. Total Trade Value:
   • The EAC traded goods worth US$ 26.9 billion with the rest of the world in Q1 2024.
   • This represents a 4% increase compared to US$ 25.9 billion in Q1 2023.
2. Exports and Imports:
   • Exports: Increased by 12%, rising from US$ 10.1 billion in Q1 2023 to US$ 11.3 billion in Q1 2024.
   • Imports: Slight decrease of 2%, from US$ 15.8 billion in Q1 2023 to US$ 15.6 billion in Q1 2024.
3. Trade Deficit:
   • The trade deficit narrowed to US$ 4.2 billion in Q1 2024 from US$ 5.7 billion in Q1 2023, mainly due to a rise in exports.
4. Top Trading Partners:
   • Major partners included China, UAE, and India, collectively accounting for 45% of the EAC’s total trade.
   • China led with trade valued at US$ 7.3 billion.
5. Intra-African Trade:
   • Trade with African countries totaled US$ 6.0 billion, making up 22.4% of EAC’s total trade.
   • Intra-EAC trade was US$ 3.3 billion, contributing 12.3% to the region's trade.

The growth in exports, narrowing trade deficit, and the EAC's trade reliance on key global partners and African neighbors​.

Here is the forecast for the EAC's international merchandise trade from 2025 to 2030:

Key Points of the Forecast:

• Total Trade: Projected to grow from US$ 27.98 billion in 2025 to US$ 34.04 billion by 2030.
• Exports: Expected to nearly double, reaching US$ 17.93 billion by 2030.
• Imports: Forecasted to increase more slowly, reaching US$ 17.57 billion by 2030.
• Trade Deficit: Expected to narrow and turn into a slight trade surplus of US$ 0.36 billion by 2030 as export growth outpaces imports.

The forecast and recent trends in the EAC's international merchandise trade highlight several significant insights about the region's economic trajectory and trade dynamics:

1. Steady Growth in Trade:
   The projected steady growth in total trade (from US$ 26.9 billion in 2024 to US$ 34.04 billion by 2030) reflects a positive economic outlook for the EAC. This growth suggests that regional economies are likely to become more integrated with global markets, benefiting from increased exports and a stable demand for imports.
2. Expanding Export Capacity:
   The faster growth rate of exports (an average annual increase of 8%) indicates that the EAC is building stronger, competitive export sectors. This could be due to regional policies aimed at boosting manufacturing, agriculture, and value-added production to generate higher export volumes.
3. Trade Deficit Reduction:
   The narrowing trade deficit—projected to close by 2030—points to the EAC's gradual shift towards a more balanced trade profile. With exports expected to surpass imports by 2030, this shift reflects improvements in the region's productivity and self-reliance.
4. Dependence on Key Trade Partners:
   Trade relationships with major global economies like China, the UAE, and India (accounting for 45% of total trade) highlight a continued dependence on a few large partners. This dependence might expose the EAC to external shocks from these economies, underlining the importance of diversifying trade partnerships, especially within Africa.
5. Increasing Intra-African Trade Potential:
   With intra-African trade already contributing 22.4% of total trade, there is substantial potential for EAC countries to leverage the African Continental Free Trade Area (AfCFTA) to further strengthen regional trade networks. This could help reduce trade barriers, increase competitiveness, and support sustainable economic growth.
6. Economic Diversification and Resilience:
   The trends suggest that EAC countries are moving towards more resilient economic structures by growing exports and reducing trade imbalances. This diversification effort could lead to greater economic stability, improve the balance of payments, and reduce vulnerability to global economic changes.