Local financial advisory firm, Bridgepath Capital Limited, says Malawi’s economic growth trajectory remains under threat due to a number of downside risks it faces.
The firm says this in its September 2023 Monthly Economic Review.
It says the economy has continued to face several significant risks including rising public debt, weather-related shocks, rising inflation and currency depreciation, which may limit the country’s potential for growth and worsen poverty.
The report indicates that the debt status is likely to worsen, looming El Niño weather is likely to affect the agricultural output while inflation is likely to continue rising.
“The recent impact of tropical Cyclone Freddy underscores this susceptibility. Additionally, Malawi is among the 53 countries expected to face challenges due to El Niño-induced dry spells in the upcoming crop-growing season.
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“The scenario of below-average rainfall during the growing season could result in crop failures and insufficient grazing, impacting agricultural output,” the report reads.
Economist from Malawi University of Business and Applied Sciences Betchani Tchereni said weather-related shocks and other risks have potential to affect growth.
He was, however, optimistic that with the expected Extended Credit Facility approval from the International Monetary Fund and other projects which government has lined up, the risks may be diffused.
“What we need is to use the funds wisely once they land in our palms by prioritising importation of things we cannot do without and fostering industrialisation so that we start consuming what we produce,” Tchereni said.
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In his latest interview, newly appointed Minister of Finance Simplex Chithyola Banda remained positive on economic outlook.
“We have lined up interventions that are addressing short, medium and long-term challenges,” Banda said.
Malawi’s economy needs to be growing by a minimum of six percent if it is to be a wealthy and self-reliant within the next seven days.
