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Economists decry 2020

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Betchani Tcheleni

Economic commentators have said outlook for 2021 remains mixed and murky as the economy still faces myriad risks.

The threats include an exogenous shock of a possible second wave of Covid-19, which is already affecting other big economies around the world.

The development comes as 2020 has already been rated as a year to forget, charecterised by challenges including a slowdown in business activities due to the pandemic and a political impasse that hampered economic growth prospects.

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Chances of a meaningful gross domestic product (GDP) growth last year were shuttered mainly by effects of the pandemic, leading to a downward revision of the GDP growth to 1.9 percent, down from a pre-pandemic estimate of 5.5 percent.

Experts fear there is a high risk of further subdued business in the country, especially during the first quarter, as there might be a spillover.

While rating 2020 as a tough year, Economics Professor at Chancellor College Ben Kalua said the country could attain meaningful growth this year if it intensified production.

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“We need to scale up maize production for headline inflation to remain low and the cost of finance will also be moderated. We might also see stability in fuel prices due to the resurgence of the pandemic,” Kalua said.

In 2020, headline inflation remained relatively subdued, being on a downward spiral since December 2019, except in October 2020 when it went up by 0.4 percentage points to 7.5 percent.

By November, average inflation was at 8.6 percent, about 0.1 percentage points shy of the annual average projected by the Reserve Bank of Malawi.

In a separate interview, The Polytechnic-based economist Betchani Tcheleni said 2020 has, been full of uncertainties.

He was optimistic that economic activities may pick up in course of this year, with potential for reasonable growth.

“By now we have learnt how to live with Covid-19 and there are promises of vaccines. So, it is promising that economies in the world will get back to work and also, seeing that the government has struck bilateral and multilateral deals, we may see a good year,” he said.

The government projected that the economy would grow by 4.5 percent this year, with inflation expected to remain within a single digit band.

The country’s economic growth averaged 4.5 percent between 2009 and 2019, way below the desired average growth rate of 6 percent for a country to meaningfully mitigate the effects of poverty while triggering development.

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