The Economics Association of Malawi (Ecama) has said it is hopeful the economy could do better this year than last year.
Responding to a questionnaire Wednesday, Ecama President, Chikumbutso Kalilombe, said the economy could ride on the stability achieved so far.
Kalilombe said Malawi had a difficult year in 2019 owing to May 21 tripartite elections and its aftermath, where most businesses were in a wait-and-see mode.
“Remarkably the macroeconomic fundamentals have held up positively with some pressure on inflation only seen towards year end but otherwise holding up well for year.
“What we need in Malawi is economic growth which stems from investments into real sectors including enhancing the agricultural sector whilst diversifying from same. So looking to 2020 we hope for more stability and thus a clearer concentration on growth,” Kalilombe said.
The World Bank has indicated that Malawi’s medium-term growth is expected to gradually pick up to between 5.0 to 5.5 percent.
The bank says the forecast would be supported by sustained improvements in the agriculture sector and by energy projects coming on stream, thereby improving power supply.
“However, this outlook is susceptible to the continuing risk of weather-related shocks, with poor rainfall having the potential to negatively impact both agriculture production and electricity supply. Additionally, if the recent political impasse and demonstrations continue, they could also further weigh on growth and investment.
“Moreover, with Malawi’s high population growth rate of around 3 percent, on a per capita basis, growth needs to increase even higher to reduce poverty rates. This highlights the importance of promoting reforms to increase growth, diversification and job creation,” the bank says in its 10th Malawi Economic Monitor.
World Bank Country Manager, Greg Toulmin, recently said the relative macroeconomic stability provides government an opportunity to implement bold reforms and establish a track record in support of growth and jobs.
He said reforms should aim at promoting growth in sectors that must eventually absorb a larger share of the workforce.
Among others, Toulmin suggested that government needs to take four key steps including taking tangible steps to strengthen fiscal policy and management to anchor macro-stability, decrease domestic debt, and increase investment.
“This should include realistic revenue assumptions at the budget planning phase, and rationalized expenditure, selecting projects that can sustainably fit within the budget envelope. It also entails reducing fiscal risks that have derailed past budgets, particularly by increasing oversight of parastatals. Developing such a strong fiscal record is fundamental to support growth, which would enable increased revenue mobilization, and to support the public and private investment that is needed to increase job creation.
“Second implement policies to unlock the potential of the private sector, and increase investment to increase job opportunities and incomes. Government needs to comprehensively change its relations with the private sector, and pro-actively remove blockages to economic transformation both in agriculture and elsewhere,” Toulmin said.
He added, “This calls for measures to: simplify business regulations and taxes; ensure higher levels of transparency and predictability in government decisions, and reduce trade inefficiencies and distortions. One key measure could be to implement the Control of Goods Act regulations. Government also needs to increase the transparency and predictability of policies for key growth enabling sectors such as ICT; move forward with implementing energy projects; and strengthen the governance and financial performance of sector utilities.”