The International Monetary Fund has revised its growth forecast for Malawi for 2012 to 1.9 percent from 4.3 percent due to a slowdown in manufacturing and agriculture.
IMF mission chief Tsidi Tsikata said in Malawiâ€™s capital, Lilongwe on Thursday, the exogenous shocks have created a more challenging environment than expected when the extended credit facility arrangement was done with Malawi.
â€œReal GDP growth is estimated to have slowed from 4.3 percent in 2011 to 1.9 percent in 2012 mainly due to contraction in output in the agriculture and manufacturing sectors,” Tsikata said during a news conference.
He said Malawi government currently faces enormous challenges such as the continuing depreciation of the exchange rate, rising inflation and unforeseen difficulties in the implementation of social protection programmes.
“The mission discussed the scope of tightening monetary and fiscal policies to stabilise the exchange rate and contain inflation,” he said.
Soaring food prices have in recent months pushed inflation to 28.3 percent, far higher than the forecast of around 18 percent for calendar year 2012.
And tobacco earnings have fallen in recent years from US$416 million in 2010 to US$292 million in 2011 and US$177 million this yearâ€”a development that puts Malawi needing more donor aid than ever before.