RBM says 2021 GDP prospects blurred
The Reserve Bank of Malawi (RBM) has said Malawi’s economic growth prospects for 2021 remain uncertain, mainly due to the second wave of Covid.
RBM Governor Wilson Banda says, since beginning of 2021, the Covid infections and fatalities have increased sharply and this has compelled the government to re-impose strict containment measures.
In a monetary policy statement, Banda says, as a result of the jump in Covid cases, domestic economic activity, which started to rebound in the second half of 2020, has moderated.
“Economic growth for 2021 will, therefore, depend on how fast the second wave of the pandemic dissipates.
“In general, domestic economic growth could remain subdued in 2021,” Banda says.
Capital Hill had predicted that the local economy could swell by 4.5 percent in 2020, up from 1.2 percent in 2020.
The Economist Intelligence Unit (EIU) has revised downwards its projection for Malawi’s economic growth from 4.7 percent to 2.1 percent in 2021.
According to Nico Asset Managers 2020 Economic Report, the revision has been necessitated in anticipation of the impact that coronavirus will have on the economy.
“Sectors that have been hit hard include hospitality, tourism and transportation. These sectors contribute significantly to the overall economy of Malawi and the fact that they are hit hard by the virus entails that the whole economy will suffer as well,” the report says.
Despite a robust performance in the first half of 2020 owing to a strong harvest and substantial government spending, economic activity in the second half of 2020 suffered from a further deterioration of the global economic outlook, resulting in substantially lower exports, a worsening economic impact of the Covid pandemic and a longer persistence of the shock.
“Lower growth rates of the economy will result in lower employment rates, due to slower industrial production and gains from retail sales, companies lower hiring to save money in the face of lower demand,” Nico Asset Managers says.
Addressing the nation on Sunday, President Lazarus Chakwera said the new Covid variant from South Africa, known as B. 1.351, has now been detected in Malawi.
South African researchers say they believe that the new variant is around 50 percent more contagious, based on the much faster rate of Covid-19 transmission since its emergence and biological studies of changes to the structure of the virus, which appear to make it easier for it to attach to and infect human cells.