The World Bank has tipped Malawi and its sub-Saharan region peers to focus on policies and reforms which would foster inclusive growth, productivity and competitiveness to enhance their economies amid the Covid pandemic.
The Bretton Woods institution further holds that reducing countries’ debt burdens will release resources for public investment in areas such as education, health and infrastructure.
It says investing in human capital would also help lower the risk of long-lasting damage from the pandemic as it would enhance competitiveness and productivity.
These views are contained in a news release published by the bank on Wednesday.
The World Bank indicates that economic recovery in the region would vary among countries while projecting that growth would range between 2.3 percent and 3.4 percent in 2021, depending on policies adopted by countries and the international community.
“In the Eastern and Southern Africa sub-region, the growth contraction for 2020 is estimated at -3.0 percent, mostly driven by South Africa and Angola, the sub-region’s largest economies. Excluding Angola and South Africa, economic activity in the sub-region is projected to expand by 2.6percent in 2021 and 4.0 percent in 2022.
“Growth in the Western and Central Africa sub-region contracted by 1.1 percent in 2020, less than projected in October 2020 partly due to a less severe contraction in Nigeria, the sub-region’s largest economy, in the second half of the year. Real gross domestic product in the Western and Central Africa sub-region is projected to grow by 2.1percent in 2021 and 3.0 percent in 2022,” reads the statement.
In the 2020/21 National Budget, Minister of Finance Felix Mlusu projected that the local economy would grow by 4.5 percent in 2021.
In an interview, local economists Donasius Pathera said the scale of debt issuances in Africa amounts to only 1 percent of the continent’s total GDP annually, whose average annual growth rate is 4 percent.
He added that the value of income generation is higher than the rate of government debt accumulation.
“On the contrary, the amount of interest expenditure has been disproportionate to the debt-to- GDP ratio. Studies show that, in developed economies, an increase of 1 percent in debt to GDP ratio is associated with an increase of between 0.02 percent and 0.03 percent in interest rates,” he said.