Minister of Finance, Economic Planning and Development Goodall Gondwe insists the country’s economy is on a rebound because signs of recovery started being noticed during the first half of the year.
He said this yesterday when he wounded up debate on the Mid-Year Budget Statement in Parliament.
According to Gondwe, the signs of a rebound depend on how positive the agricultural production will turn out to be.
“I also said that the government is, therefore, cautiously optimistic that an economic recovery could emerge this year. The deceleration of the inflation rate to 18.2 percent from 24.2 percent that has been the largest since May 2012.
“Secondly, as the chairperson of the Budget and Finance Committee tacitly agrees, the variability of the exchange rate has moderated, and the fact that the Reserve Bank of Malawi saw it fit to reduce its policy interest rate by 3 percentage points, and above all, the increase in the private sectors’ capacity utilisation from 58 percent to 68 percent, point to a possible economic rebound,” he said.
The minister further observed that when an economy is on a positive growth trajectory, an economic shock such as Malawi experienced is followed by a sharp growth rate increase.
“This has happened in Malawi at various times in the 1970s, 1980s and more recently in 1994 and in 2008. When the growth dipped, the follow-up growth rate has been more than 9 percent. The circumstances that proceeded.
“Such growth rates are similar to our circumstances. If this observation repeats itself, it should not be hard to agree with the Reserve Bank of Malawi’s growth rate projection of 5.6 percent and my forecast of at least 6 percent growth rate in 2017.
“But this is a forecast – it could prove to be wrong, particularly if climatic conditions change and become horribly unfavourable again. Mr. Speaker, Sir, I particularly wish the Leader of Opposition to note my disclaimer so that he does not construe,” he said.
He also blamed the previous government of incurring huge stock of arrears amounting to K155 000 billion, which he said will continue to haunt Malawi for the next three years.n