‘Economic outlook remains murky’

Felix Mlusu

Economic prospects remain mixed and murky, with chances of recovery highly dependent on Covid vaccine roll-out effectiveness and impact of commencement of the agricultural marketing season, a recent Market Intelligence report from the Reserve Bank of Malawi (RBM) has shown.

During the month of January 2021, economic performance was mixed for industrialised and emerging market economies as well as in the sub-Saharan Africa region.

On the local scene, the report says, on one hand, the continued shortage of supply of foreign exchange is expected to trigger a further depreciation of the exchange rate in the near future, thereby raising non-food inflation through high costs of imported goods, including fuel.


“On the other hand, as the country approaches the agricultural harvest season, food price pressures are expected to remain subdued due to increased supply of maize and other cereals.

“Furthermore, the roll-out of Covid pandemic vaccines in Malawi could help to contain infections, thereby allowing the economy to take the recovery path as some restrictions are expected to be eased,” reads the report.

During the month of January, the kwacha depreciated by about1.0 percent against the US Dollar.


Headline inflation also registered a marginal increase to 7.7 percent in January 2021 from 7.6 percent the previous month.

Delivering his Mid-year Budget Statement, Finance Minister Felix Mlusu projected that the economy would grow by 3.5 percent.

He attributed the estimate to possible bumper yield the country expects this year due to good rains and effective implementation of the Affordable Input Programme.

Some local economists have, however, predicted that economic growth prospects would be hindered by the Covid pandemic.

Last year, the economy grew by 0.9 percent.

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