Chairperson of the Budget and Finance Committee of Parliament, Rhino Chiphiko, has disputed Finance Minister and the Reserve Bank of Malawi’s projection that Gross Domestic Product (GDP) is likely to rebound to seven percent this year.
Chiphiko argues that global and sub-Saharan region projections are at between 3.9 percent and 3.3 percent, respectively, and that Malawi, being a small economy, cannot grow up to seven percent.
He said this when he was reacting to the Mid-year Budget Review Statement on Monday in Parliament. Chiphiko said the projections as too optimistic.
Chiphiko said that his committee noted mixed developments in almost all sectors of the macro-economy.
“The world economy is projected to grow to 3.9 percent in 2018 up from 3.6 percent in 2017 and the advanced economies are expected to grow only by 2.3 percent.
“GDP growth for sub- Saharan region will be 3.3 percent in 2018 up from 2.7 percent last year a result of an increase in export commodity prices and robust agriculture industry,” Chiphiko said.
He described the Malawi economy as a lame duck because of power supply and climate change challenges it is facing coupled with its geographical position, where it is a landlocked country.
“We are very pessimistic over what the minister is saying. In the short term, the economy is going nowhere. I think the only solutions that are feasible are to maintain fiscal discipline, contain expenditures, arrest corruption, theft and fraud but I don’t think there are those checks and balances at the moment,” Chiphiko added.
Gondwe told Parliament on Frida to average a growth rate of seven percent backed by the recent staff level agreement with the International Monetary Fund (IMF).
“The IMF has given a strong forecast and, if the macroeconomy is managed well, as is the case now, the economy might grow in the medium term to between three and five percent,” Gondwe said.