Experts say the economy remains susceptible to shocks including harsh weather conditions which could derail the recovery process and further frustrate growth strides.
Local economic think-tank, the Economics Association of Malawi (Ecama), and independent commentator Betchani Tcheleni feel the country needs to put in place resilient cushions.
They were commenting on the assumptions anchoring the K2.84 trillion 2022- 23 National Budget which suggest, that, in the next 12 months, Malawi would attain a gross domestic product growth rate of 4.1 percent and 4.0 percent in 2023, an average inflation of 9.1 percent, a policy rate of 12.0 percent and tax refunds of 3.0 percent of total tax revenue collection.
“Government will aim to entrench macroeconomic stability, enhance the country’s resilience to external shocks and fast-track economic recovery during the post Covid pandemic period,” said Finance Minister Sosten Gwengwe when he presented the budget statement.
Speaking in an interview earlier in the week, Economics Association of Malawi (Ecama) Executive Director Frank Chikuta said, at face value, the assumptions look realistic but there are significant risks which threaten attainment of the targets.
Chikuta cited the prolonged drought at the beginning of the farming season and the Tropical Storm Ana, among major challenges facing the economy.
However, he said the country should wait for a full report on the damage caused by weather-related shocks.
“Unfortunately during the budget presentation, most of the details were not presented on several issues. Therefore, we are left guessing on some of the important issues such as reforms which will happen in the Affordable Inputs Programme,” Chikuta said.
Apart from affecting the agricultural sector which remains the economy’s mainstay, the floods brought about devastating effects on the energy, transport and health sectors.
In a separate interview, Tcheleni, a Malawi University of Business and Applied Sciences-based economist, said the agriculture sector remains the most affected, a thing that dims growth prospects as it feeds into almost all other sectors of the economy.
He was, however, optimistic that, if the budget were implemented efficiently, especially in having a vibrant mining sector, cannabis cultivation and manufacturing sector, the impact would be minimal.
“We have complained about the amount of money that has gone towards the Forestry Department because we need to bring back the environment so that, at least, we minimize the impact of natural disasters,” he said.
Malawi’s economy was projected to grow by 3.8 percent during the 2021-22 financial year at the back of a bumper harvest.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.