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IMF reassessing Malawi’s economic growth estimate

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The International Monitory Fund (IMF) says it is currently reassessing Malawi’s economic growth outlook for 2017, but with a cautious optimism on the near term prospects.

Earlier, IMF estimated that the economy would grow by 4.5 percent in Gross Domestic Product (GDP) terms.

The figure is slightly different from that of the Reserve Bank of Malawi’s (RBM) expectation that “the economy would rebound” in 2017, forecasting the domestic activity to grow by 5.6 percent.

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In response to an e-mailed questionnaire, IMF Resident Representative, Jack Ree, presented “cautious optimism” while saying there was a need for more time to revise the growth forecast.

“If the nature keeps working on our favour, as it has done, so far, this year, and the authorities manage to consolidate macroeconomic stability gains, which I think is likely, a reasonably strong growth is within reach,” said Ree.

He said this is giving a much-needed break to Malawians who have gone through a lot of hardship lately emanating from the prevailing economic woes.

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According to Lee, agriculture will be the spearhead of possible economic growth, given the subdued levels of production—particularly maize—during the last two years.

He also said that dissipation of extraordinary power blackouts and water shortages will equally help boost business confidence and general sentiments, which will help to restore manufacturing activities and demand for services.

“The year 2017 can be an inflection point. It indeed provides an opportunity of window to tame inflation, stabilise kwacha, and bring back confidence for good. Then it can open a door for a new sustained trend of robust growth and low inflation,” said Ree.

He, however, said that this would depend on whether the system can continue—for the next few years— policy focus on disciplining budget and taming the inflation.

He said that there was a “need to bite the bullet and do tough things” if the nation is to see real changes within the next two to three years.

Chancellor College Economics Professor Ben Kalua said in a telephone interview that the 4.5 percent economic growth estimate was attainable this year.

He, however, cautioned stakeholders against what he called unrealistic optimism, saying, the country is still sailing through turbulent times with key macroeconomic fundamentals still in red, hence the need to deploy more effort towards attaining the estimate.

Malawi remains an agro-based economy and this year’s crop outlook remains positive after two years of crippled productivity due to harsh weather conditions.

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