UK, US speak on growth prospects
Two of Malawi’s development partners, Britain and the United States (US), have indicated that the country may miss the projected 4.1 percent growth in 2022 due to continued pressure facing key macroeconomic fundamentals.
The two governments say, however, Lilongwe must focus on policy reforms to address business sector concerns.
In a response to an emailed questionnaire, acting British High Commissioner Fiona Ritchie said the projection was made before the Ukraine invasion by Russia, which has dampened recovery prospects across the world.
She said the 4.1 percent forecast is unlikely to be met due to the impacts of the crisis on Malawi, including: higher import costs, both directly for Russian wheat and indirectly by raising global oil, gas and fertiliser costs, with fertiliser affecting future harvests.
“…Russian and Ukrainian tobacco imports from Malawi are significant. This should lower the country’s exports and an outflow of capital from the developing countries to ‘safer’ assets. The effects of recent cyclones on Malawi were also significant.
“We encourage the government to undertake the reforms necessary to work towards securing the International Monetary Fund (IMF) and World Bank support for debt relief,” she said.
She said her government welcomes President Lazarus Chakwera’s announcement of the new Presidential Delivery Unit investment labs.
“These labs will be an important part of addressing the concerns of businesses struggling due to the pandemic and a difficult investment climate, and should promote crucial job, revenue and export growth,” Ritchie said.
“We encourage policy makers to prioritiseexpenditure and policy reforms to address business concerns, for example improving the supply and reliability of electricity, and promoting agricultural productivity and diversification through irrigation,” she added.
US Embassy Public Affairs Officer Namita Biggins said Malawi’s economy has begun to rebound from the negative impact of Covid but implementing key reforms and addressing outstanding structural limitations will help the economy expand and diversify.
“We encourage the Government of Malawi to continue to support private sector development by streamlining administrative processes and promoting sector reform to create an enabling business environment,” Biggins said.
When presenting the just passed 2022- 23 National Budget, Minister of Finance Sosten Gwengwe indicated that assuming the effects of natural disasters such as Tropical Storm Ana do not persist, the economy is expected to grow by 4.1 percent.
“This growth will be supported by an increase in economic activities in mining and quarrying, manufacturing, transportation, construction, and wholesale and retail sectors. In 2023, the economy is projected to grow by 4.0 percent,” Gwengwe said.
