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Goodall Gondwe sees robust GDP after rebasing

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By Taonga Sabola:

Finance Minister Goodall Gondwe has said government has embarked on a Gross Domestic Product (GDP) rebasing process which will help create the true picture of the economy.

Presenting a mid-year budget statement in Lilongwe, Gondwe said the rebasing will help take Malawi out of the list of world’s poorest economies.

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Rebasing GDP or revising the methods and base data used to calculate GDP has become a growing trend among African nations in recent years.

Malawi last rebased its GDP in 2010.

The process which provides a clearer picture of an economy’s size and structure has implications for a wide array of economic stakeholders; for instance, updated figures allow governments to better evaluate their fiscal positions and potential revenue bases while providing investors with more accurate information on which to base their investment decision.

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Currently, according to Gondwe, Malawi’s GDP stands at K4 trillion or about $5.3 billion.

“Currently, a number of people are not taken into account about what they do. For example, the informal sector is ignored. We are also ignoring a lot of things happening in government as well as the private sector. There are a lot of things that are happening in Malawi that are not being recorded.

“Now, we would like to record as many things as our friends, for example Zambia, are doing. Now, we think that if we could include those, our GDP is going to be much larger than is the case now. So, that’s what the rebasing is all about,” Gondwe said.

University of Malawi’s Chancellor College economics professor Ben Kaluwa said rebasing could help paint a picture of how big the Malawian market is.

Kaluwa said one thing that investors look for is the size of the market when making an investment decision.

“So, if the rebasing could result in a bigger GDP figure, then that may attract investors who could in turn pump their money here and create the much-needed jobs,” Kaluwa said.

In 2014 alone, Kenya, Nigeria, Tanzania, Uganda and Zambia all completed rebasing exercises which led to significant revaluations of their GDPs.

The rebasing saw Nigeria’s economy nearly doubling, Tanzania’s grew by a third, Kenya’s and Zambia’s increased by a quarter and Uganda’s rose by 13 percent.

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