University of Malawi Economics Professor Ben Kalua has cast doubt over possibility of the economy growing by 3.8 percent in 2021 as earlier projected by the Treasury due to, among other factors, effects of the Covid pandemic and reduced economic activity in the year.
Kalua said the local economy has been greatly affected by global factors such as increasing energy costs and the Covid pandemic, which affected supply chains.
“The supply chain issue is global and Malawi is heavily dependent on imports for production, whether it’s in agriculture or manufacturing; so, we are affected by trends in the global supply chain.
“This year’s growth projection can’t be attained but next year, if we could follow what other countries are doing and invest significantly in production of industrial hemp and narrow the trade deficit, we could grow the economy by more than 6 percent,” Kalua said.
When presenting the 2021-22 national budget Minister of Finance Felix Mlusu said the economy was expected to jump to 3.8 percent in 2021 and 5.2 percent in 2022 owing to growth in the agriculture sector, projected at 6.2 percent in 2021.
He said most economic sectors were also expected to register positive growth rates in the same period.
But in a separate interview, Director for Centre for Research and Consultancy Milward Tobias said the 3.8 percent gross domestic product (GDP) growth rate projection is below the minimum six percent target set in Malawi 2063.
He said even if this year’s projection were to be achieved, the country would have to be worried that it is already missing targets of the Malawi 2063 vision.
“Much as economic activities have resumed, the economy is still grappling with unfavourable macroeconomic environment which is slowing down the economy.
“Agriculture, forestry and fishing sectors may continue to register strong growth rate, wholesale and retail may be negatively affected by scarcity of foreign exchange and shrinking demand due to the rising cost of commodities. Construction sector may boost due to infrastructure projects financed through the bond and other means. In net though, GDP growth rate may be far less than the projected 3.8 percent,” Tobias said.
Last year, the country’s economy was projected to grow by 1.9 percent but grew at 0.9 percent.