Nico Assets outlines economic challenges

An Economic and business advisory firm says Malawi is likely to miss this year’s 5.8 percent projected economic growth owing to macroeconomic instability, among others.

Nico Asset Managers says in its monthly economic update released last week that several risks will continue to haunt the economy, especially in the second half of the year.

The company says the challenges range from weak currency, upsurge in inflation, and high interest rates, large fiscal deficit and the impact of adverse weather condition which poses threats to the economic growth forecast.

It says the weak export base will also likely affect the kwacha’s stability against major currencies as the level of imports far exceeds the value of export.

“This result in higher demand for foreign currency than the available supply thereby creating an imbalance which will result in further currency depreciation,” reads the report.

It further states that the increase in government budget expenditures will lead to an increase in government borrowing, hence, widening the fiscal deficit.