Agro sector output set to rise, says RBM

The Reserve Bank of Malawi (RBM) says the agriculture, forestry and fishing sector is projected to grow by 5.5 percent this year, a jump from the previous year’s 4.2 percent largely attributed to projected good rains.

RBM National Accounts figures show that along with that growth, the sector’s contribution to gross domestic product (GDP) is also expected to rise to 23.2 percent from 22.8 percent last year.

But on the contrary, growth in sectors such as accommodation and food services, mining and construction are expected to be subdued when compared to the prior year, the figures show.

The agriculture sector has over the years supported Malawi’s growth pillars, accounting for an average of 30 percent of GDP, 85 percent of the labour force and about 90 percent of the total foreign exchange, figures show.

In an interview yesterday to comment on the figures, economic statistician Alick Nyasulu observed that Covid-19 is hurting the economy and agriculture is only surviving at the mercy of good rains.

He said agriculture in Malawi plays an important role in the economy, but time has come to reduce  over-reliance on the sector, which mainly deals with primary commodities.

Said Nyasulu: “Agriculture is a tradition and a way of life for Malawians. It is not really a commercial industry and few taxes are generated from it except for tobacco.

“If there was drought, it would go down and there is need to look at other sectors.”

Based on the RBM figures, wholesale and retail trade is also poised to contribute about 12.2 percent to the economy this year and grow by two percent from 1.3 percent last year.

Nonetheless, other key sectors including mining, manufacturing, electricity, gas and water and accommodation and food services are projected to decline to 1.2 percent, 3.7 percent, 3.5 percent and 1.3 percent in that order from 2.3 percent, 4.3 percent, 4.6 percent and 21.4 percent in that order recorded the previous year.

The economy is projected to grow by 3.8 percent in 2021 compared to 0.9 percent in 2020, according to the RBM.

In its Fourth Monetary Policy Committee (MPC) Statement, the RBM cautioned that the third wave of the Covid-19 pandemic is posing challenges to growth prospects.

Investment manager and advisory firm Nico Asset Managers Limited has also warned that Malawi’s economic outlook faces considerable downside risks largely due to the impact of the Covid-19 pandemic.

In its September Economic Review, the firm observed that sluggish vaccine availability and uptake will continue to necessitate social distancing policies and perpetuate risks of new waves of infection, which will weigh on growth in the services and industry sectors.