The Reserve Bank of Malawi (RBM) has revised downwards Malawi’s 2024 economic growth projection to 2.3 percent from an initial estimate of 3.2 percent.
This represents a 0.9 percentage point cut. The estimated output is, however, higher than 1.9 percent recorded in 2023.
A statement of the MPC’s third meeting of 2024 published last week indicates that the downward revision reflects the adverse effect of the El Nino-induced drop in agricultural output.
Meanwhile, the World Bank also revised downwards its gross domestic product (GDP) growth projection for 2024 to 2 percent.
In its latest Malawi Economic Monitor titled ‘Reforming with Urgency – Malawi’s Path to Economic Stability,’ the World Bank says while implementation of planned macroeconomic and structural reforms is expected to boost GDP growth over the medium term, an El Niño-induced drought has worsened the near-term growth outlook.
“The drought has compounded longstanding macroeconomic imbalances, with large fiscal deficits, balance-of-payment challenges, unsustainable debt and price instability weighing on economic activity since 2020,” reads the report.
In a recent interview, Malawi Confederation of Chambers of Commerce and Industry President Wisely Phiri said the current economic environment is too harsh for the growth of local businesses.
Economist Velli Nyirongo said the downward revision of Malawi’s economic growth forecast is a significant setback as it indicates underlying economic challenges that require immediate attention.
Nyirongo said the development reflects the nation’s struggle to transition to a green economy, with the agricultural sector bearing the brunt of the impact through El Niño-related setbacks which has necessitated a downward adjustment to the growth projection.
He suggested concerted efforts to transform the agricultural sector through shifting from rain-fed agriculture towards irrigation and higher-value crops, coupled with investments in processing infrastructure.
