The Economist Intelligence Unit (EIU) has projected that Malawi’s economy will grow by an average of 4.6 percent in the next five years. This is contrary to government’s expectation of an average seven percent growth in the medium-term, which according to the International Monetary Fund (IMF) and Minister of Finance, Economic Planning and Development Goodall Gondwe could trigger economic growth.
In its second quarter country report for Malawi, EIU, a British business within the Economist Group, expects the economy to grow by 3.6 percent in 2018 after accelerating to an estimated 4.5 percent in 2017, on the back of a bumper harvest, five percent in 2019, 4.9 percent in 2020, 4.5 percent in 2021 and 4.8 percent in 2022.
The EIU, which provides forecasting and advisory services through research and analysis, banks on improved maize production and plans to expand other cash crops, rising aid inflows and public capital investment as an important force behind an annual average real growth rate.
“Rising aid inflows and public capital investment will be important growth drivers for construction activity as government seeks to expedite projects
that address the country’s infrastructure deficit.
“However, one major drag on growth will be the tobacco sector, production is set to register little or no growth during the forecast period. In the power sector, frequent load-shedding and outages will remain an issue throughout the forecast period even though water levels at dams should improve as the period progresses,” reads the report in part.
Gondwe earlier told Parliament that if the macroeconomic environment is managed well as it is now, the economic growth rate could reach seven percent in the medium-term.
Treasury has projected a gross domestic product (GDP) growth rate of four percent for 2018, according to the 2018 Malawi Annual Economic Report, observing that growth will be driven mainly by good performance in the human health and social work, financial and insurance services, wholesale and retail trade, public administration and defence, information and communication, and transportation and storage.
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) chief executive officer Chancellor Kaferapanjira said a modest GDP growth forecast is not enough to fix the economy, observing that the country’s export base is narrow and commodity-based which is also prone to climatic conditions.
He said Malawi needs at least seven percent growth rate for a sustained period of not less than six years to bring change in the economic development of the country.
“The quality of growth and the sectors in which the growth is generated matters. Sustainable growth cannot, and will not, happen without private sector prosperity,” he said.