The International Monetary Fund (IMF) has lowered its 2024 economic growth projection for Malawi to 2 percent from an earlier estimate of 3.3 percent.
The downgrade comes a few weeks after the World Bank also slashed its gross domestic product (GDP) growth approximation for Malawi to 2 percent from 2.8 percent.
The squeezed growth outlook is largely attributed to an expected lower agricultural output this year due to El Nino weather.
It also comes as the local economy has largely been volatile and faced 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 Tropical Cyclone Freddy lately.
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In a statement at the end of the mission to discuss recent economic and financial developments and economic policies that would underpin the First Review under the Extended Credit Facility (ECF) programme Thursday, IMF Mission Chief Mika Saito said Malawi’s economic outlook remains mixed.
“Weather-related shocks continue to impact the Malawian economy, exacerbating food insecurity.
“The economic outlook for 2024 remains positive but economic growth is now projected at 2 percent, reflecting the impact of El Nino on agricultural production and spillovers to the rest of the economy. A successful winter crop would cushion the impact of drought on the agriculture sector,” Saito says in the statement.
She then challenges the government to work towards addressing weaknesses in governance while enhancing its drive on external debt restructuring.
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She said fiscal discipline remains critical in the face of elevated spending pressures.
“Rebuilding international reserve buffers and normalising the foreign exchange market are critically important to facilitate the return of trade credit and reduce vulnerability to external shocks.
In a phone interview Thursday, Secretary to the Treasury Betchani Tchereni said while the government expects the harsh weather conditions Malawi experienced this year to affect GDP growth, it is still upbeat on prospects of an above-2-percent growth.
He premised his optimism on winter cropping, where he said the government has invested heavily in increasing food production.
Meanwhile, Malawi will have to wait a little longer before it accesses another tranche under the IMF’s ECF programme as “discussions will continue in the coming weeks toward completion of the First ECF Review”.
There are variations on GDP growth outlook for 2024 for Malawi, with projections from various institutions, including government entities, ranging between 1.5 percent and 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 analyses 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.
