Strong contradictions have emerged in the economic front over the real gross domestic product (GDP) growth rate figure, underpinning the 2015/16 budget.
While Finance minister is overly optimistic that the economy is projected to register a high growth rate of 7.0 percent, other credible and internationally recognised institutions think otherwise.
And Gondwe has also contradicted a government annual economic report which states that GDP growth rate in 2015 is expected to be 5.4 percent, a marginal decrease from a growth rate of six percent registered in 2014.
But according to the World Bank, Malawi is projected to record a rate of growth of GDP of 5.1 percent in 2015, which is 1.9 percentage points lower than Gondwe’s ‘ambitious’ growth of 7 percent.
“The achievement of this [5.1 percent] rate is premised on the continued expansion of the agricultural and wholesale and retail trade sectors,”said World Bank senior economist for Malawi Richard Record when launching the bank’s publication called Malawi Economic Monitor last week.
Record said the net effect of the January 2015 floods on GDP growth over the year is expected to be neutral as the impact of the floods is offset by recovery and reconstruction work.
And the International Monetary Fund (IMF) projection on the same is closer to that of the World Bank.
The institution, in its latest report for Malawi, says real GDP growth is projected to remain in the 5.5–6 percent range.
“This will be helped by a more stable policy environment, ongoing public investment in infrastructure and efforts being made to improve the business environment,” it says.
On one hand, the Reserve Bank of Malawi (RBM) has own projections on the same economy as well.
The central bank, through its recent latest Monetary Policy Committee (MPC) minutes now projects that the economy will grow by 5.4 percent, a 400 basis points lower than its earlier forecast of 5.8 percent.
“The downward revision has been necessitated by a contraction in agriculture due to late on-set of rains, floods and early cessation of the rains,” said RBM Governor Charles Chuka.
But in an interview yesterday, Treasury spokesperson Nations Msowoya backed Gondwe’s projection.
Said Msowoya: “The authority is the Ministry of Finance and these others are just commentators and so you can choose whom to believe.”
And several economic experts this week rated Gondwe’s projection on GDP growth rate as unattainable.
For instance, professor Ben Kalua of Chancellor College noted that price of fuel continues to rise so is the price of maize; hence, unrealistic for Gondwe to be upbeat on growth prospects.
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) president Chancellor Kaferapanjira said government’s assumptions amid the current economic status are unattainable.
In his presentation, Gondwe assumed that the nominal value of GDP for the financial year 2015/16 is K3.4 trillion.