By Wezzie Gausi:
The Reserve Bank of Malawi says it expects the local economy to grow by 2.3 percent in real gross domestic product (GDP) terms in 2024, up from 1.9 percent in 2023.
The projection is also higher than the 0.9 GDP growth registered in 2022.
But it is slightly higher than the revised 2 percent projections by the International Monetary Fund and the World Bank.
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Earlier, the Britton Woods institutions estimated that the local economy would swell by 3.3 and 3.8 percent.
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The squeezed growth outlook is largely attributed to expected lower agricultural output this year due to El Nino weather.
It also comes as the local economy has largely been volatile and faced with myriad challenges.
Malawi has been affected by a series of shocks—both natural and exogenous—including an outbreak of cholera and Cyclone Freddy lately.
But speaking at the Tobacco Association of Malawi (Tama) Trust Annual General Meeting in Lilongwe yesterday, RBM Director for Economic Policy Research Kisukyabo Simwaka said the economy is now on a recovery path.
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He said non-food inflation has also stabilised since January 2024 as a result of a tight monetary policy stance taken by the central bank.
“However, headline inflation rose to 32.7 percent in May 2024, from 32.3 percent recorded in April 2024, reflecting rising food prices. Prospects are that headline inflation will slow down as food shocks dissipate.
“The onset of the tobacco marketing season has resulted in $327.0 million realised just within the 11 weeks of trading. These surpassed the three-year average, giving prospects that exchange rate pressures will be eased in the short to medium term,” Simwaka said.
The central bank forecasts the economy to grow by 4.3 percent next year.
But in a statement at the end of a mission to discuss recent economic and financial developments and economic policies that would underpin the First Review under the Extended Credit Facility (ECF) programme recently, IMF Mission Chief Mika Saito said Malawi’s economic outlook remains mixed.
“Weather-related shocks continue to impact the Malawian economy, exacerbating food insecurity.
“The economic outlook for 2024 remains positive but economic growth is now projected at two percent reflecting the impact of El Nino on agricultural production and spillovers to the rest of the economy. A successful winter crop would cushion the impact of drought on the agriculture sector,” Saito hinted.
She then challenge the government to work towards addressing weaknesses in governance while enhancing its drive on external debt restructuring.
Meanwhile, commenting on input of tobacco industry to the country’s economy, Ministry of Agriculture Director of Crop Development Elisa Kazira said the leaf remains a major forex earner.
Tama Farmers Trust President Abiel Banda said farmers were impressed with prices the green gold has fetched this season.
