The Ministry of Finance, Economic Planning and Development has revised downwards 2017 and 2018 growth projections to an average of four and 4.5 percent, respectively.
Initially, Treasury had projected 2017 growth prospects at 6.4 percent while initial projections for 2018 were pegged at six percent
In an interview yesterday, Secretary to the Treasury Ben Botolo said: “We are expecting a growth of four percent for 2017 and four to 4.5 percent in 2018. The main issue is that while inflation rate has been on the decline, the economy must also rise, which pushes up factors of production, including labour and capital, which is now used to the full capacity to increase economic growth.
“To sustain this inflation trend, we should ensure that our fiscal policy should speak to the monetary policy of the Reserve Bank to avoid counter-acting what the central bank is doing.”
This is not the first time that government has revised downwards its economic growth projections. Last year, the projections were also revised downwards to 2.9 percent from five percent.
And in 2016, the economic growth rate was also revised downwards from an ambitious six percent to 3.1 percent largely due to adverse weather conditions that reduced harvest by over 30 percent. Malawi is an agro-based economy.
This year, growth prospects have been dealt a big blow with the combined effects of dry spells and fall armyworms attack that could shutter this financial year’s growth prospects. The current drought is estimated to cut maize production by 40 percent or 210 740 tons while army worms could reduce output by 10 percent or 73 201 tons.
In an earlier interview, Centre for Social Concern (CfSC) economic governance programme officer Lucky Mfungwe said the projected growth rate was too optimistic unless strategies were put in place to take care of climate change effects.
He said: “The growth rate would hardly be reached in this context as agriculture alone is a major contributor to the country’s GDP [gross domestic product]. In addition, the dry spells may lead to hoarding of maize which would be one of the factors to push maize prices up.”
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