The International Monetary Fund (IMF) has advised authorities to implement measures that can boost economic recovery and build resilience.
In its World Economic Outlook issued on Friday, the global lender said this can be achieved by strengthening fiscal sustainability to create a strong foundation for growth.
The IMF has maintained Malawi’s gross domestic product (GDP) growth forecast for 2021 at 2.2 percent, but has cautioned that risks that include lower-than-anticipated vaccine rollout and tighter financial conditions would set back the recovery in growth and drag growth below this outlook’s baseline.
Malawi’s forecast is, however, higher than the 0.9 percent achieved last year, but is lower than government’s 2021 growth forecast of 3.8 percent.
Reads the report in part: “The worsening pandemic developments in sub-Saharan Africa are expected to weigh on the region’s recovery.
“This would be coupled with the slow rollout of vaccines as the main factor weighing on the recovery.”
The IMF said that vaccine access has emerged as the principal fault line, observing that recovery is not assured even in countries where infections are currently low.
The Reserve Bank of Malawi (RBM) has, however, maintained its growth projection, saying following a year of subdued growth in 2020, the domestic economy is set to recover in 2021 and grow by 3.8 percent.
In the Third Monetary Policy Statement issued on Friday, RBM Governor Wilson Banda said the economic recovery is in part underpinned by the pick-up in local and cross-border economic activity as a result of the global efforts with respect to availability of the Covid-19 vaccinations.
He cautioned that the domestic outlook remains uncertain owing to the current third wave of the pandemic.
Treasury revised its forecast for the country’s growth upwards from 3.5 percent to 3.8 percent in 2021.
The government’s revision was made due to increased agricultural output after a good harvest season resulting from above normal rainfall and the Affordable Inputs Programme as well as global spillover effects from increased global demands.