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Economists tell govt to fast-track growth

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By Taonga Sabola

The Economics Association of Malawi (Ecama) has said Malawi’s economy needs to grow at the rate of eight percent per annum if the country is to double its gross domestic product (GDP) per capita by 2030, as stipulated in the Malawi Implementation Plan (MIP-1) of 2063.

Ecama Executive Director Frank Chikuta was speaking in Lilongwe during a pre-budget consultation meeting that Finance Minister Felix Mlusu had with various stakeholders.

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Chikuta said in finance, for one to double their investment, they use what is called the Rule of 72.

The Rule of 72 is a simple way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors obtain a rough estimate of how many years it will take for the initial investment to duplicate itself.

“So, if we continue growing at the rate of three percent or so, it would take us about 24 years or more to double our national income.

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“At the level that our income is at the moment, for us to reach the lower middle-income economy status come 2030, we need it to be doubled so for it to be doubled, we need the economy to grow at higher rates than what we are doing now,” Chikuta said.

The last time Malawi’s economy grew bullishly was in 2009 when it reached 9.2 percent when Malawi was the second fastest growing economy in the world after Qatar.

However, over the past decade, the economy has been registering dismal growth hampered by a myriad of shocks such as cyclones, fore army worms, droughts and in recent years, the Covid pandemic.

In 2020, the economy grew by 0.8 percent and the World Bank projects growth in 2021 to be at 2.4 percent.

The Bretton Woods institution has further predicted that the local economy will swell by three percent in 2022.

Finance Minister Felix Mlusu said Malawi will bank on a number of strategies to keep its economic growth above six percent in the next eight years.

Mlusu said among others, Capital Hill is banking on the National Export Strategy (NES II) launched by President Lazarus Chakwera last week.

He said by implementing the NES II, it will boost local production for both import substitution and exports.

Mlusu added that government will be banking on a robust performance of the mining sector to accelerate economic growth, in addition to commercialising agriculture by rolling out mega farms.

 

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