Firms say outlook remains gloomy
Financial and pension sectors players say the economic outlook remains mixed and murky.
This comes at a time the local economy continues to face downward risks such as uncertain weather patterns, erratic electricity supply and rising inflation.
Impact of the Covid pandemic itself remains eminent, coupled with fiscal slippages, high population growth and food shortages.
In their separate financial statements for the year ended December 31 2021, various firms from the two sectors predict continued elevating commodity prices which will continue piling pressure on inflation and other key macroeconomic fundamentals.
According to one of the players, Old Mutual Malawi, the economic growth prospects remain weak with significant downward risks from uncertain weather patterns and productivity inhibitors such as insufficient power supply.
“Further downward risks include possible future waves of Covid and restrained business activity because of limited forex exchange supply. Inflation outlook over the next two years remains elevated based on potential increases in utility tariffs and energy prices as well as imported and food inflation,” the statement reads.
The sentiments are echoed by Nico Pension Services which says inflation is expected to remain in double digits due to pressures from increases in energy and food prices.
On its part, Continental Capital Limited says the macroeconomic environment is still being impacted by the Covid pandemic and economic recovery is expected to be slow despite the rollout of Covid vaccines worldwide and this may result in marginal growth in GDP in 2022.
“The war in Ukraine is also expected to result in a significant slowdown of the global food and oil prices in 2022. Inflation rate is expected to rise on the back of rising global food and oil prices,” the statement reads.
While on its part, NBS Bank fears that inflation will increase with heightened pressures emanating from food and nonfood inflation as fuel pump prices, fertiliser, utilities and food prices rise.
The bank adds that the Malawi Kwacha has weakened against major trading currencies, a situation which is projected to continue in 2022 as uncertainty grows amidst the war between Russia and Ukraine, whose effects will be felt on the global scale.
Speaking earlier, Minister of Finance Sosten Gwengwe admitted the economy faces a lot of downside risks.
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.