By Chimwemwe Mangazi:
In a typical case of dreaming in colour, Finance Minister Goodall Gondwe has expressed hope that the economy would grow by at least seven percent in 2019.
The growth projection comes at a time global economic think-tanks have predicted that economic growth would remain subdued this year.
Gondwe said economic growth will be propelled by the stability seen in macroeconomic fundamentals in 2018.
The local Chancellor of the Exchequer said such developments would lead to Malawi being able to finance its budget fully without the need for external support.
“We started well, what we have done so far is to stabilise the economy. It means that debt is not accumulating as it used to between 2014 and 2015 meaning that we can now start growth. I expect that we will catch up with the growth rate of seven or eight percent soon,” Gondwe said.
This comes against the background that the economy was projected to grow by 5.2 percent in 2017, 4 percent in 2018 and 4.1 percent in 2019.
Reserve Bank of Malawi spokesperson, Mbane Ngwira, agreed with Gondwe, stressing that they expect inflation to stand at nine percent in 2019 before falling to five percent in the first quarter of 2021 and the exchange rate to remain stable.
“What we expect to see, going forward, is that inflation will remain in single digits on annual average up to 2021 to hit our target of five percent, we also expect to build our foreign exchange reserves to around six months of imports building on the three months we have maintained so far and this will caution the exchange rate to be stable.
“We expect that the policy rate will come down to 11 percent and that these developments will sustain the growth that the economy is facing right now from the 4.1 expected for 2019 to around six to seven percent in 2020,” Ngwira said.
The Malawi Economic Monitor published by the World Bank in November indicated that Malawi’s growth outlook is highly vulnerable to weather conditions and further pointed that growth is projected to gradually increase to around four and five percent over the next two years.
However, a country report published by the International Monetary Fund (IMF) in May 2018 predicted that economic growth will increase gradually, reaching over six percent in the medium term.
“Growth will be supported by enhanced infrastructure investment and social services as well as an improved business environment, which would boost confidence and unlock the economy’s potential for higher, more broad-based and resilient growth and employment.
“Downside risks to growth include political pressures in the run-up to next year’s elections that could weaken policy discipline and reform efforts, weather-induced shocks, and declines in agricultural commodity prices,” reads the report in part.
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