Economic commentators have advised government to wake up and be realistic in its planning following the International Monetary Fund (IMF)’s prediction of a gloomy outlook for 2023 for developed countries.
IMF Managing Director Kristalina Georgieva was quoted in international media as saying one-third of the world’s economies is expected to be in recession in the New Year.
“[The year] 2023 will be ‘tougher’ than last year as the United States, European Union and China see their economies slow,” Georgieva said.
But in an interview, Minister of Finance Sosten Gwengwe said the country is not projecting any negative growth.
During the 2022-23 mid-year budget review, Gwengwe said, consistent with the downturn in global economic growth, Malawi’s growth prospects have been equally affected.
“Malawi’s real gross domestic product (GDP) growth is projected at 1.7 percent in 2022, a downward revision from 4.1 percent envisaged at the start of the 2022-23 fiscal year. In 2023, growth is estimated at 2.6 percent,” Gwengwe said.
However, Director General of the National Planning Commission (NPC) Thomas Chataghalala Munthali has described the IMF’s warning as a wakeup call to the government and the private sector in the country.
He said the country needs to create wealth so it can minimise any external global economy shocks or the country will delve into more debt.
“Malawi should focus on the low hanging fruits that we have already identified as a country in the economic sectors such as energy, information communication technology (ICT), strategic transport networks, mining, commercialised agriculture, tourism and the rest will fall in place,” Munthali said.
Scotland- based economic commentator Velli Nyirongo said it will be naive to think that Malawi will be spared because, in today’s global economy, Malawi is not an Island.
He said the dwindling global growth will translate in lack of global growth that could trigger investors to pull money out of the country.
“This may affect tourism income in many countries as tourists may halt trips. Countries will find it harder to access foreign loans because of higher interest and higher risk to default on debt payments as donor countries will be striving to sort their economies. When the West sneezes, the whole world catches the cold.
“Malawi should expect reduction in foreign aid, decline in exports of some commodities which will affect the Kwacha further in 2023. Local small and medium enterprises that have been heavily relying on China will feel the pinch, as most of the factories in China will be affected by the slump,” Nyirongo said.
Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but decline to 6.5 percent in 2023 and to 4.1 percent by 2024.