The local economy is projected to rebound next year as chances of a meaningful Gross Domestic Product (GDP) growth this year have been shuttered by effects of the Covid-19 pandemic.
GDP growth for 2020 is projected at 1.9 percent, down from a pre-pandemic projection of 5.5 percent.
However, according to figures contained in a recently published Financial and Economic Review by Reserve Bank of Malawi (RBM), in 2021, GDP growth is projected at 4.5 percent, ‘contingent on the evolution of the pandemic.”
The central bank says the coronavirus pandemic and its containment measures have significantly affected the domestic economic activity this year.
The pandemic is affecting the country through two channels, namely, spillovers from the changes in the global environment and the impact of the domestic outbreak.
“The tourism and accommodation; transportation and storage services, wholesale and retail trade, and manufacturing are among the heavily impacted industries,” reads part of the review.
The projection is in line with prediction by the African Development Bank (AfDB) which, in 2020 Africa Economic Outlook, indicated that the local economy would bounce back strongly next year after weathering the storm of Covid-19.
AfDB, however, projected that in the baseline scenario, the Malawi economy could swell by 1.3 percent this year and 0.6 percent in the worst case scenario.
It says growth would recover to 2.6 percent and 3.3 percent, respectively in 2021 buoyed by agriculture, tourism, exports receipts and a rebound in foreign direct investment.
In an interview yesterday, Dean of Commerce at the Polytechnic, Betchani Tcheleni, said the outlook is promising as business activities pick up with most economies also opening up as reported Covid-19 cases subdue.
He said if the economy thrives towards diversified production, the country’s GDP growth could surpass the 4.5 percent prospect in the short to medium terms.
“We hope that international trade will rebound and there will be improved performance of business domestically. We also expect continued stability in the political landscape as well as good rainfall this season. These factors consider, we should expect the economy to surely, rebound,” Tcheleni said.
Recently, the Treasury said the government was working on two scenarios, first which assumes that Covid-19 would ease by September 2020 while the other, a worst case scenario, assumes that Covid-19 would ease by December 2020.