Improvements in key macroeconomic fundamentals are courting hopes for growth as firms continue to report positive results in the first half of 2017.
Our desk research shows that most firms listed on the Malawi Stock Exchange (MSE) have registered an increase in pre-tax profits in their half-year statements.
In its published statement, intergraded mobile network provider, TNM, reported a 71.73 percent increase in net profit to K4.75 billion from K2.77 billion due to high level of service revenue and moderate subscriber base.
FMB also announced a group half-year profit after tax growth of 79 percent to K5.03 billion.
Reacting, economic experts said consistent slow-down in inflation and stability of the Malawi Kwacha gives hope for improved business performance and economic growth.
Inflation has in the past ten months been on a downward spiral, decelerating to 10.2 percent in July, the lowest rate since March 2012.
The continued drop in inflation led to a recent policy rate cut by the Reserve Bank of Malawi (RBM) to18 percent from 22 percent, a move that has also seen commercial banks cutting their borrowing rates to 27.5 percent on average, from 31 percent.
Malawi’s import cover was reported to have also jumped above the internationally accepted three months of imports, with the local unit, the kwacha, equally remaining on a steady path.
Investment management and advisory firm, Alliance Capital Limited, said last week that most companies would continue with their positive performance for the remaining part of the year, with those listed on the MSE continuing to attract investors, thereby increasing demand.
In an interview, economics lecturer at the Catholic University, Hopkins Kawaye, said the situation is a clear indication that businesses are reaping from gains in the economy.
“There has been a decline in inflation which has triggered a drop in interest rates. It entails that there is potential for further economic growth and businesses will equally continue with positive performance,” he said.
The International Monetary Fund (IMF) projected that the economy will grow by 4.5 percent this year.
However, president of the Economic Empowerment Action Group, Lewis Chiwalo, said in an interview that while the improved indicators would stimulate economic growth, more needs to be done to attain the estimated growth figures.
“Whatever has happened in the past six months has not yet fully translated into growth of the economy. It may take a bit of time before we see realistic results on the ground,” Chiwalo said.