Authorities have trimmed the growth rates for key areas of agriculture and manufacturing in 2023, the latest Reserve Bank of Malawi (RBM) Financial and Economic Review has shown.
According to the review released last week, growth in the agriculture, forestry, and fisheries sub-sector, which is the main contributor to the country’s gross domestic product (GDP) has been slashed to 0.8 percent in November 2023 from 1.1 percent estimated in May 2023 and from a growth of 0.9 percent in 2022.
The review says the slight downward revision was driven by the unfavourable weather conditions in the Northern and Southern regions.
“In addition, agricultural production was affected by the operational challenges in the procurement and distribution of affordable inputs in the 2022-3 growing season, which negatively affected small-scale agriculture production,” the review says.
Looking ahead to 2024, the agriculture sector is projected to grow at 1.9 percent, a slight upward revision from the earlier projection of 1.7 percent.
- Advertisement -
On manufacturing, the growth forecast for 2023 has been adjusted down from 1.0 percent to 0.4 percent during the November 2023 estimates.
According to the economic review, the downward revision was primarily attributed to challenges associated with the availability of foreign exchange, which continued to compromise the industry’s ability to import necessary raw materials.
The decline in agricultural production in 2023, as highlighted above, further exacerbated the industry’s challenges by causing a shortage of domestic raw materials.
Another sector heavily impacted by the shortage of forex is the wholesale and retail trade whose growth forecast for 2023 was revised further downwards from the May estimate of 0.6 percent to minus 1.9 percent.
- Advertisement -
- Advertisement -
In 2022, the sector experienced a contraction of 2.3 percent.
The expected negative growth in 2023 is attributed to the persistent challenges such as foreign exchange shortages and the slow growth in the agriculture and manufacturing sectors, which are suppliers of inputs to the wholesale and retail trade sector.
Further, the review says, the rise in inflation experienced in 2023 has reduced disposable incomes of households and other economic agents, who are key players in the industry.
