The African Development Bank (AfDB) has said it expects the local economy to grow by at least three percent in 2023 from a 2.8 percent Gross Domestic Product (GDP) growth estimate last year.
The projection is 0.4 percentage points higher than the 2.6 percent GDP growth estimate made by Finance Minister Sosten Gwengwe when presenting the 2022- 23 mid-year budget statement in November 2022
It is also above the 2.2 percent growth estimate by the World Bank as published in the Britton Wood Institution’s most recent Malawi Economic Monitor.
In its January 2023 Africa’s Macroeconomic Performance and Outlook, AfDB says most African economies face significant headwinds as global and domestic shocks undermine progress toward restoring macroeconomic and social stability.
It says higher living costs stoked by rising inflationary pressures have affected economic recovery strides.
The continent’s development finance institution predicts Malawi’s annual headline inflation to average 14 percent this year.
In the report, the regional lender advocates adoption of bold policy actions to help mitigate the compounding inflationary risks.
The Bank reiterates its call for accelerating implementation of structural reforms to enhance government-enabled private sector industrialisation in key sectors and ensure sustainability in economic growth.
Ironically, the Malawi economic growth estimates are by far below six percent annual growth target rate in real terms, if the country is to attain a middle-income economies mark at least within the next eight years.
Lately, Malawi’s economy has been riddled with both exogenous and structural challenges which have stifled chances of growth.
While still nursing effects of the Covid pandemic, Malawi economy was susceptible to other exogenous shocks emanating from disrupted global supply chains due to the Russo- Ukrainian War, among other things.
This, coupled with other domestic structural challenges, pushed up the cost of commodities with headline inflation—the rate at which commodity prices change at a given time in an economy— remaining on an upward spiral during a greater part of 2022.
But local economists and industry captains remain upbeat that the economy will peak this year on the basis of the expected improvement in agricultural output and restored dornor confidence.
The Malawi Confederation of Chambers of Commerce and Industry (MCCCI), a private sector umbrella body, says the outlook looks promising.
In a recent interview, MCCCI president Lekani Katandula said the industry expects improvements in forex supply, agricultural output and the energy situation in the country, which will necessitate a hastened economic recovery process.
“I think 2023 could be better than 2022. We seem to have more normal rains so far, Covid is under control and hopefully Cholera will be quickly contained.
“The World Bank and the rest of the international partners are giving positive support signals, and Kapichira power is now expected to be progressively restored from February. Barring major offsetting shocks, we can look forward positively to 2023,” Katandula said.
In a separate interview Tuesday, Economics Association of Malawi vice president Betchani Tcheleni also said albeit the challenges that rocked the economy in the year ending, 2023 looks promising.
He projects a good agriculture season, which he said would feed into the economy by helping stabilise food prices and contain the inflationary pressure.
Finance Minister Sosten Gwengwe recently said the government remains committed to stabilising the economy and implementing measures to reduce the pressure exerted by various shocks.