Economic outlook difficult, says Reserve Bank of Malawi
The Reserve Bank of Malawi (RBM) says Malawi’s economic outlook remains mixed and murky with prevailing macro-economic challenges likely to persist.
RBM says in its 2015 Annual Report that negative impact of weather related shocks coupled with persistent high inflation could further hurt the economy.
“The economic outlook remains difficult, reflecting uncertainties related to weather conditions and persistently high inflation,” says the report in part.
RBM has, however, reiterated that the economy may still grow by 5.1 percent on the assumption of modest recovery in the agricultural sector especially commercial agriculture and a notable expansion in the services sector.
This remains in sharp contrast with the projected 2.7 percent and 2.6 percent growth estimate by the International Monitory Fund (IMF) and the World Bank.
RBM then states that the real GDP is projected to grow by 7.0 percent in 2017, depending on improvements in weather conditions.
RBM says real GDP growth in 2015 was affected by poor macroeconomic landscape when it estimated at 3.1 percent in 2015 from 6.2 percent in 2014.
“The slowdown in economic activity in 2015 was mainly attributed to the under-performance of the agriculture sector due to weather related shocks that led to a decline in production in 2014/2015 season,” reads part of the report.
The central bank says the lower production also had knock down effects on the performance of other main sectors of the economy such as manufacturing, transportation, wholesale and retail trade.
Manufacturing sector for instance was estimated to grow by 3.8 percent in 2015 from 6.3 percent in 2014.
The Malawi kwacha is reported to have depreciated by 41.1 percent against the US dollar to trade at K664.37 per dollar at the end of 2015 compared to K470.78 per dollar in 2014.
“The depreciation was heightened by strengthening of the dollar on the international market,” says the report.