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World Bank, Treasury differ on 2021 outlook

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The World Bank and the Ministry of Finance are divided in opinion on the performance of the local economy in 2021 amid continued cases of Covid-19.

The World Bank is predicting a 3.3 percent growth while Treasury predicts 4.6 percent.

In its January 2021 economic forecast, the Bretton Woods institution predicts that the local economy will grow by 3.3 percent while the global economy will grow by 4 percent.

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It further says sub- Saharan Africa will grow by 3.7 percent.

“Wide scale distribution of Covid-19 vaccine in the region will likely face many hurdles, including poor transport infrastructure and weak health systems capacity. Such constraints, compounded by natural disasters such as recent devastating floods and rising insecurity, particularly in the Sahel, could delay recovery,” the report reads.

The institution’s forecast falls short to that of the Ministry of Finance, which believes that the economy will grow by 4.6 percent this year regardless of the Covid-19 vaccine.

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However, in an interview, Ministry of Finance spokesperson Williams Banda said the country’s economy is poised to grow by 4.6 percent this year.

He said the projection was made after considering various parameters government has implemented.

“Malawi is an agro based economy so the gross domestic product (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-19,” Banda said.

Economics Professor at the 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.

Last year, the government revised economic growth from an earlier projection of six percent to 1.9 percent owing to the impact of the Covid-19 pandemic.

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