Malawi Stock Exchange-listed FDH Bank has said the local economic environment would remain challenging in 2024 with the country facing continued foreign currency shortages.
This, according to the bank, will emanate from the widening trade deficit and slow gross domestic product (GDP) growth.
The country has in recent years seen a glaringly wide annual trade gap of about $2 billion as it exports commodities worth $1 billion compared to the $2 billion worth imports bill.
The economy is projected to grow by only two percent by the International Monetary Fund (IMF) and the World Bank largely due to an expected lower agricultural output this year due to El Nino weather.
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The local economy has largely been volatile and faced with myriad challenges.
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Malawi has been affected by a series of shocks—both natural and exogenous—including an outbreak of cholera and Cyclone Freddy lately.
There are variations on GDP growth outlook for 2024 for Malawi with projections from various institutions including government entities ranging from 1.5 percent to 3.3 percent.
The Reserve Bank of Malawi estimates that the economy would swell by 3.2 percent while the Economist Intelligence Unit, a research and analysis department of the Economist Group, expects real GDP growth for Malawi to be 1.5 percent in 2024.
The African Development Bank said in its latest bi-annual Africa Macroeconomic Performance and Outlook Report that it expects the Malawi economy to grow by 3.5 percent in 2024.
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In her report to the bank’s annual general meeting on Friday, FDH Bank board chairperson Charity Mseka indicated that the bank expects continued volatility of key macroeconomic fundamentals.
She said while the magnitude of the impact of the El Nino weather on the economy is yet to be determined, the bank foresees elevated annual inflation rate, with the local currency also seen continuing to depreciate against major trading currencies.
However, according to Mseka, the bank expects large-scale mega-farm output, high growth in construction and manufacturing sectors to help propel reasonable growth of the economy.
“Looking ahead, the local economic environment is expected to remain challenging in 2024 with the country facing continued foreign currency shortages from the widening trade deficit gap and slow gross domestic product growth,” Mseka indicates in the report.
Speaking on the sidelines, Mseka said in response, the bank has developed a new strategy to foster adaptability, resilience, agility and sustainable growth.
“As a bank, we are always supporting the private sector; those that are in manufacturing business or even in construction. We do engage them on a number of issues. This is one of the issues we have been discussing with them.
“We will see how we can assist them whether in terms of forex; we will make sure that we meet the demands of our customers in that area. But we do appreciate the hardships they are going through,” she said.
Shareholders took turns in urging the bank to consider enhancing its reach to help the government fight hunger and ensure food security in the country.
Meanwhile, the bank has announced a profit after tax of K35.6 billion in the year ended December 31 2023, about 55 percent higher than K22.9 billion earned in 2022.
Its net interest incomes grew by 60 percent.
One of the minority shareholders Joe Maera hailed the bank for its sustained positive performance.
“The expectation, as of now, is that we are going to have a good return. But we are not so sure because the current situation may affect the performance of the bank,” he said.
