Malawi’s main driver of the economy, agriculture, is expected to rebound to 3.9 percent in 2019 up from 0.9 percent last year, the Reserve Bank of Malawi (RBM) says in its second Financial and Economic Review.
The rebound in agriculture, as well as an anticipated 3.6 percent growth in mining sector, 4.6 percent growth in manufacturing sector, and in other sectors is expected to propel the economy to 5.0 percent up from the anticipated 4.0 percent in 2018.
The agriculture sector continues to be the largest contributor to Gross Domestic Product (GDP) at 27.1 percent.
“Growth in the sector will mainly be driven by crop and animal production; and fishing and aquaculture sub-sectors and the anticipated performance of the sector is expected to have a positive bearing on the general economic activity of the country,” reads the RBM report.
RBM says, in 2020, growth in the agriculture sector is projected at 5.1 percent.
Agriculture expert, Tamani Nkhono Mvula Thursday said, for the 2020 projection, the country needed to put clear assumptions that may guide such projections.
He, however, said the projections for 2019 make sense taking into consideration the results of the crop estimates in the first half of the year, but also how the market, especially that of tobacco, is fairing currently.
“Malawi’s agriculture is predominantly rain-fed and it is difficult to put realistic predictions with such a vulnerable sector unless we are basing such projections on the continuation of the current scenario,” Mvula said.
Malawi’s economy has remained agro-based. That is to say, the strength of the economy depends on the vibrancy of the agriculture sector.
RBM figures show that real GDP is projected at 5.0 percent in 2019, a 1.0 percentage point increase from 4.0 percent estimated for 2018, due to increased agricultural production on account of favorable weather conditions.
Real GDP growth for 2020 is projected at 5.1 percent.
Inflationary pressures mounted during the second quarter of 2019 and headline inflation averaged 9.0 percent, up from an average of 8.7 percent recorded in the first quarter of 2019, but slightly lower than 9.1 percent recorded in the corresponding quarter of 2018.
Meanwhile, the wholesale and retail trade sector is projected to record a growth of 4.5 percent, higher than 4.1 percent recorded in 2018 and lower than 5.0 percent recorded in 2017.
The sector anticipates a slight growth in 2019 on account of a better agricultural season which translates into increased disposable income for the population, according to RBM.
Consequently, in 2020 growth is estimated at 3.9 percent.