Uncertainty surrounds the local economy’s growth amid the Covid pandemic second wave which continues to pose a threat to the economy with the continued rise in cases.
In its January 2021 economic forecast, World Bank predicted that the local economy would grow by 3.3 percent, Treasury predicted in the national budget that the economy would grow by 4.6 percent while the first 2021 Reserve Bank of Malawi (RBM) Monitory Policy Committee (MPC) meeting has expressed uncertainty on growth.
According to a statement from the committee which is chaired by RBM Governor Wilson Banda, domestic economic activities, which started to rebound in the second half of 2020, have moderated due to restrictions placed by government amid the pandemic’s second wave.
“Economic growth for 2021 will, therefore, depend on how fast the second wave of the pandemic dissipates. In general, domestic economic growth could remain subdued in 2021,” a statement from MPC reads.
Even though last year, the country was not hit hard by the pandemic’s first wave, the economy grew 1.9 percent.
Treasury, however, defended its forecast through spokesperson Williams Banda, who said their basis is the Affordable Input Programme (AIP) and a good rainfall pattern which will result in a bumper harvest, the backbone of Malawi’s economic growth.
“Malawi is an agro-based economy so the GDP growth is on account of the Affordable Input Programme (AIP) through maize production as well as the positive impact of government projects which have been lined up in 2021 even though the projection is dependent on the normal weather outturn as well as subdued impact of Covid,” Banda said.
Economic Professor at Chancellor College Ben Kalua has since advised stakeholders to scale up agricultural productivity if the growth is to be achieved.
“We need to scale up enough on maize production for the inflation rate to remain low and the cost of finance will also be moderated because of the cuts in different rates emanating from the cut in policy rate and we might also see stability in fuel prices due to the resurgence of the pandemic,” he said.
Apart from agriculture, the tourism sector is another sector that has a good contribution to the Malawi economy as, last year, it contributed 7.6 percent to GDP even though there were travel restrictions.
Malawi’s economy is sensitive to outside shocks due to its overreliance on imports while exporting raw agricultural produce, with tobacco as the main commodity.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.