By Taonga Sabola and Justin Mkweu
The International Monetary Fund (IMF) has slashed Malawi’s Gross Domestic Product (GDP) growth rate for 2020 from five percent to 1 percent, data on IMF website shows.
The downgrade in Malawi’s growth is due to the impact of Covid-19.
IMF Resident Representative Farayi Gwenhamo, was, however not immediately available for a comment yesterday.
In an interview Thursday, Chancellor College economic professor, Ben Kalua said the revised growth rate is not surprising.
“These are things that are expected because the pandemic is global and has affected every economy so Malawi cannot be exempted, and in the case of Malawi it has highly affected the demand and supply curves,” Kalua said.
In its financial statement for the year ended December 31, 2020, one of the country’s insurance firms, Old Mutual Life Assurance Company said economic outlook is murky this year due to the pandemic.
“The earlier positive economic prospects for 2020 have already been dampened by the Covid-19 pandemic, which has negatively impacted economies and financial markets across the world.
“The IMF has revised the 2020 Gross Domestic Product growth projection for Malawi from the initial 5 percent to1 percent because of the pandemic. The prevailing political situation may magnify the downward risk on economic growth and the resultant investment outcomes,” Old Mutual says.
Reserve Bank of Malawi (RBM) Governor, Dalitso Kabambe, last week said the country’s economic outlook remains uncertain in the wake of Covid-19.
“The key question for me is; how would the pandemic behave in Malawi. What pattern is it going to take? Is it going to take the same pattern as in the US where you are seeing a big increase on daily basis? Or is it going to be gradual and not go that far?
“When you talk to people in the Ministry of Health, the experts who are familiar with pandemics, they are also not certain as to what pattern it is going to be like. So it really depends,” Kabambe said.
He noted that in their economic analysis, they have three models where the impact is minor, moderate and then the worst case scenario.
“If I was flying a plane I would say am still in the middle of a storm. I don’t know how heavy the story is the next few miles. So I would rather wait and see how that would be. Our colleagues in the US appear to be saying, we think the spread now is at its peak.
“In our case we are still here. We don’t know what path it is going to take. The cloud is still not clear. We would wish to wait a little bit. Now the fog is so dense, not very clear to project our eyes beyond the fog,” Kabambe said.
Impoverished Malawi needs growth of above six percent per annunm to reduce poverty levels of its citizens.
Covid-19 has shaken the global economy, including poor countries such as Malawi. As of Thursday, the country had recorded 37 cases of confirmed
Covid-19 cases, three of whom have died and seven have recovered.