An Annual Economic Report for 2021 produced by Nico Asset Managers has projected that the economy will rebound by 4.1 percent in 2022.
The projection is an average of growth estimates from the Economics Intelligence Unit [3.1 percent], the International Monetary Fund [3 percent], World Bank [5.3 percent] and the government [5 percent].
However, the report notes that the economy will remain vulnerable to shocks stressing that the Covid pandemic will continue to hamper growth and adversely affect the livelihoods of Malawians as sectors of the economy struggle to recover as a result of human capital disruptions, global supply chain disruptions and travel bans.
“Government should tighten fiscal policy by reducing government expenditure, increase government revenue base to finance debt and ensure tax compliance,” suggests the report.
The report further notes that development partners such as the World Bank revised downwards 2021 projections to 2.4 percent from 2.8 percent.
It also notes that in the Malawi Covid Socio- Economic Recovery Plan (SERP) 2021-23 released by the Ministry of Economic Planning, Development and Social Reforms (MoEPD & SR), the government revised downwards its growth forecast for 2021 from 3.8 percent to 2.5 percent.
“The downward revisions were made to reflect the ongoing impacts of the Covid pandemic. While the IMF and World Bank maintained their forecasts at 2.2 percent and 2.8 percent respectively; in contrast, the EIU revised upwards its forecast from 2.3 percent to 2.7 percent on account of the better-than-expected agricultural harvest resulting from above normal rainfall,” the report reads.
In its 2021 business environment assessment, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) indicated that the short-term outlook does not look promising due to worsening pandemic dynamics and unfavourable weather patterns.
“The economic recovery plan that has been developed is quite an encouraging step and if properly implemented, it could go a long way in offsetting some of the risks,” the report reads.
Economist from Malawi University of Business and Applied Sciences Betchani Tcheleni believes while the pandemic poses a great threat to economic growth due to disruptions in trade patterns, people have devised ways of dealing with it.
“We exported products that are raw and Covid affected different sectors of the industry; therefore, it is a realistic expectation that we cannot grow beyond the said projections.
“For now, we have learnt to live with the pandemic and there are great promises for vaccines, so, it is very likely that, this year, economies will get back to normalcy and trade patterns will be restored,” Tchereni said.
Late last year, President Lazarus Chakwera launched a two-year economic recovery plan describing it as a foundation for turning around the economy.
However, the local economy continues to be troubled by rising inflation, a depreciating Kwacha, shortage of foreign currency and rising commodity prices.