The Reserve bank of Malawi (RBM) has projected Malawi’s economic growth for 2016 at 5.8 percent, a huge increased from the 3 to 4 percent as projected by the International Monetary Fund (IMF) three weeks ago.
The central bank admits, however, that the projection could be revised downwards due to the impact of El-Nino weather condition on the agricultural sector.
At the end of its review mission in Malawi early this month, the IMF projected Malawi’s economy to grow between 3 and 4 percent in 2016, subject to weather conditions.
Malawi’s economy grew by 3 percent in 2015, from an official projection of 3.2 percent, after registering an impressive expansion of 6.2 percent in 2014.
In its Economic Review for 2015 released on Monday, RBM estimates the Malawi economy to rebound and register growth of 5.8 percent in 2016 on the assumption of normal harvesting season and a more stable macro-economic environment.
RBM is optimistic that the agriculture sector will grow by 5.2 percent in 2016 and that tobacco production will increase by 9.5 percent.
Explaining the subdued growth in 2015, RBM says it was a result of contraction in the agriculture sector due to erratic rains and floods in 2014/2015 growing season.
It says inflationary pressures heightened during the fourth quarter of 2015 with deadline inflation averaging 24.7 percent from an average rate of 23.1 percent in the preceding quarter and 23.7 percent during the fourth quarter 2014.
Total government revenue for the fourth quarter of 2015, says RBM, amounted to K156.2 billion against total government expenditure of K174.3 billion, resulting into government budgetary operations deficit of K18.1 billion for the quarter under review.
On the external front, RBM says Malawi’s overall balance of payments registered a surplus of US$0.2 billion in 2015, virtually unchanged from the 2014 position.
However, RBM says the balance of payments is projected to register a deficit of US$0.1 billion in 2016 while the current account deficit is estimated at US$0.8 billion compared to US$1.1 billion recorded in the previous year.
Similarly, the financial account balance is estimated at US$1.4 billion down from US$1.0 billion registered in 2014.