Economics Association of Malawi (Ecama) has reiterated the need for the government to prioritise economic diversification, reduce reliance on agriculture while investing in agricultural development and climate resilience to cushion poor Malawians from the pangs of deteriorating buying power.
This is coming at a time peoples’ purchasing power has been weakening witnessed by an increase in the cost of living to an average of K510,634 in June from K491,037 in January.
This is coupled with an average 2.3 percent depreciation of the Kwacha in the first half of 2024.
In an interview, Ecama President Bertha Chikadza said effective policies to control inflation and stabilise the exchange rate are essential.
“Recent developments on the cost of living, Kwacha performance and inflation trends are a pressing concern for Malawian households as they exacerbate poverty and hinders economic development.
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“Macroeconomic instability, food price inflation, and climate-related shocks are primary drivers of this trend. Malawi’s reliance on agriculture makes it vulnerable to external shocks, further complicating the situation,” Chikadza said.
In a separate interview, economist Marvin Banda said the outlook on most macroeconomic fundamentals remains unpredictable considering the distortions the election cycle has been having on the economy.
“Inflation is predicted to follow the agricultural cycle; however, fiscal aid may continue to have an upward effect on prices irrespective of the muted fiscal multiplier due to implementation issues that modelling does not take into consideration.
“The greatest expectation for Malawians is external forces that may undermine the progress many are trying to make by dwindling the gains the economy has made post November 2023,” Banda said.
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Headline inflation inched up, albeit slightly, in August 2024 to 33.9 percent whereas month-on-month inflation went up by 0.2 percentage points from 33.7 percent recorded in July.
In its Consumer Price Index released recently the National Statistical Office highlights a rise in the food inflation rate to 42 percent in August 2024 from 41.9 percent in July.
Non-food inflation increased to 227 percent from 22.4 percent.
