The World Bank has said it expects the local economy to swell by 3.7 percent this year.
The growth projection is 0.4 percentage points shy of the 4.1 percent forecast Finance Minister, Goodall Gondwe, pronounced in the 2018/19 budget statement.
It also comes barely two months after the International Monetary Fund (IMF) predicted that the local economy would grow by 4 percent.
In its Global Economic Prospects Report for 2018 released in Washington on Tuesday, the Bretton Woods institution has pegged Malawi’s Gross Domestic Product (GDP) growth for next year at 4.1 percent before the economy accelerates by 4.9 percent in 2020.
World Bank’s 4.1 percent growth projection for 2019 is 1.9 percentage points shy of the 6 percent growth Gondwe predicted in the budget.
Among others, Gondwe told Malawians that the government sees the Malawi economy growing even faster due to the many infrastructural development projects lined-up in the energy and agriculture sectors, most of which are growth enablers.
“Government is committed to continue implementing sound macroeconomic policies aimed at spurring growth and creating jobs by focusing on productive sectors as outlined in the [Malawi Growth and Development Strategy] MGDS III with strong multiplier effects,” Gondwe said.
Malawi Confederation of Chambers of Commerce and Industry (MCCCI), however, cautioned in its Post Budget Review, that Gondwe’s modest GDP growth forecast of 4.1 percent and 6.0 percent in 2018 and 2019 respectively is not enough to fix the economy, because Malawi’s export base is narrow, commodity based and prone to climatic conditions.
The Chamber said Malawi needs a growth rate of at least seven percent sustained over a period of not less than six years to bring a meaningful change in the economic development of the country.
“The quality of growth and the sectors in which the growth is generated matters. It is a very well-known fact that sustainable growth cannot, and will not, happen without private sector prosperity. This sector has the potential to have a transformative impact on a struggling economy like Malawi and shift the economy from an agriculture based economy to an industrial based one.
“More and more countries in Sub-Saharan Africa are shifting towards value addition through industrialisation. Industrialisation, driven by private sector growth, has all the pre-requisites of mopping out unemployment which is one of the major challenges that Malawi is grappling with today,” MCCCI said.
World Bank Group President, Jim Yong Kim, said, if the robust growth in the global economy seen this year could be sustained, it could help lift millions out of poverty, particularly in the fast-growing economies of South Asia.
“But growth alone won’t be enough to address pockets of extreme poverty in other parts of the world. Policymakers need to focus on ways to support growth over the longer run—by boosting productivity and labor force participation— in order to accelerate progress toward ending poverty and boosting shared prosperity,” Jim said.
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