IMF sees 4.5 percent growth in 2019
The International Monetary Fund (IMF) has said it expects the local economy to grow by 4.5 percent this year.
IMF Resident Representative to Malawi Farai Gwenhamo was speaking in Lilongwe yesterday when the fund launched the Regional Economic Outlook for Sub-Saharan Africa under the theme ‘navigating uncertainty’.
The outlook by IMF is 0.5 percentage points shy of the five percent Capital Hill has predicted the local economy to grow this year.
Gwenhamo said the economy is expected to grow by 5.1 percent next year.
Among others, the outlook shows that growth in the sub-Saharan Africa is projected to remain at 3.2 percent in 2019 and rise to 3.6 percent in 2020.
Gwenhamo said growth is forecast to be slower than previously envisaged for about two thirds of countries in the sub-Saharan region.
“The downward revision reflects a more challenging external environment, continued output disruptions in oil-exporting countries and weaker-than-anticipated growth in South Africa,” Gwenhamo said.
She said enhancing competition among market players in different sectors of the economy could help Malawi boost its chances of achieving accelerated growth.
Gwenhamo said weak competition among firms in the sub-Saharan Africa region, including Malawi, has resulted in citizens paying more for goods and services.
She said firm markups are about 11 percent higher in sub-Saharan Africa relative to other emerging market economies and developing countries and are more persistent.
Reserve Bank of Malawi Governor Dalitso Kabambe said countries in the region, including Malawi, have recorded lower growth rates in recent years due to their narrow export bases which have taken a serious knock with the continued trade tension between the US and the UK.
Kabambe said there is need for Malawi to diversify its economy by making sure that it relies on a basket of things rather than the traditional tobacco, cotton, sugar and tea.
“We need to look at growing other sectors including tourism which could help complement what tobacco and other crops are contributing.
“This would be crucial because, if one sector is affected, then we could rely on the other sectors,” Kabambe said.
On the issue of enhancing competition, National Planning Commission Director General Thomas Munthali warned that the process needs to be carefully handled to avoid the mistake Malawi made around 1995 when it liberalised the economy on advice from the IMF and World Bank.
Munthali said prior to 1995, Malawi had firms such as BAT which was processing tobacco, David Whitehead processing cotton and Grain and Milling processing maize into maize flour but they faced serious challenges when the doors of the economy were completely opened to other players in the name of competition.