The International Monetary Fund (IMF) has slashed Malawi’s gross domestic product (GDP) projection by 0.8 percentage points, from the 3.5 percent projected in December last year to 2.7 percent.
IMF disclosed this in the World Economic Outlook released in Washington DC at the ongoing IMF/World Bank Spring meetings which started on Monday.
But Finance Minister Sosten Gwengwe, who projected the economy to grow by 4.1 percent when he presented the 2022-23 National Budget Statement in February, Tuesday said Capital Hill is yet to do its own assessment to guage the impact of recent events in the global economy on the local GDP prospects.
The cut in Malawi’s GDP comes in the aftermath of two devastating tropical storms Ana and Gombe which swept thousands of hectares of corn fields in the Southern Region and left many households destitute.
In addition, the tropical storm also crippled Power production as it destroyed machines at Kapichira power Station in Chikwawa, taking out 130 megawatts from the national grid.
The reduced growth projections also come at a time industry is on its knees as manufacturers struggle to get the much-needed foreign exchange to import raw materials.
It also comes at a time the price of essential commodities such as fuel and food has shot through the roof in the wake of Russia’s inversion of Ukraine.
In an interview, Gwengwe admitted that the global economy remains uncertain.
He was, however, quick to note that the IMF survey is skewed more towards the risks posed by the Ukraine-Russia war.
“We are yet to do our own survey to gauge the impact on our real GDP prospects.
“We are watching the global economic trends and adjustments will be made if it becomes necessary to do so,” Gwengwe said.
The reduced GDP growth projections also come at a time Malawi’s top foreign exchange earner, tobacco, remains weak on the auction floors.
Presenting the budget in February, Gwengwe said assuming the effects of natural disasters like Tropical Storm Ana do not persist, the economy was expected to grow by 4.1 percent in 2022.
He said the growth would be supported by an increase in economic activities in mining and quarrying, manufacturing, transportation, construction, and wholesale and retail sectors.
He added that, in 2023, the economy is projected to grow by 4.0 percent.
Centre for Research and Consultancy Director Milward Tobias Wednesday said the cut in Malawi’s growth prospects by the IMF should be something to worry about.
The cut in growth is likely going to throw spanners in the efforts by authorities to fight poverty. Malawi needs a growth of at least six percent to register meaningful strides in the fight against poverty.