Malawi economic recovery fragile—MCCI
The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) says economic recovery from Covid-19 remains in a fragile state as the country continues to face a number of challenges including rising inflation and supply chain disruptions.
In its February Economic Review Report, MCCCI observes that the ongoing geopolitical tension between Russia and Ukraine is also a cause for concern, as the higher-than-anticipated oil prices induced by this phenomenon could delay the convergence of inflation to medium-term targets in most countries, including Malawi.
Said the Chamber: “This development could compel central banks to implement less accommodative monetary policies that could jeopardise economic recovery plans.
“If central banks in advanced economies, particularly the United States of America, decide to tighten their monetary policy stance, this could also develop into a risk of currency depreciations in emerging and developing economies, which could fuel inflation pressures.”
According to the Chamber, the emergence of new shocks such as Tropical Cyclone Ana has also added more pressure on government expenditure and the response needed to assist people affected by its impact will most likely take away financial resources that could have been used for public investment to aid the recovery of the economy.
Meanwhile, the Reserve Bank of Malawi (RBM) has singled out the ongoing geopolitical tension between Russia and Ukraine as a cause for concern, stating that the higher than anticipated oil prices induced by this phenomenon could delay the convergence of inflation to medium-term targets in the country.
RBM, in its January Market Intelligence Report issued on Tuesday, has also indicated that the development could compel central banks to implement less accommodative monetary policy that could jeopardise economic recovery plans.
The central bank was, however, quick to mention that domestically, it will continue to monitor both domestic and global developments, and will take necessary action to mitigate any risks to the inflation outlook that are perceived to be permanent.
The bank has, however, projected that the economy will grow to 4.1 percent in 2022, from an estimated 3.9 percent in 2021, despite some downside risks, including the Covid-19 pandemic and Tropical Cyclone Ana.
RBM governor Wilson Banda in a Monetary Policy Committee Report said the optimism stemmed from the initial prospects of a good agriculture season in anticipation of favourable weather conditions and continued implementation of the Affordable Inputs Programme.
Banda, however, admitted that uncertainty regarding the evolution of the Covid-19 pandemic and its containment measures as well as erratic weather patterns including the recent Tropical Cyclone Ana, could thwart these growth prospects.
Malawi University of Business and Applied Sciences economics lecturer Betchani Tcheleni also believes that the growth may be subdued as the underlying aspects have faced hiccups.
“The effects of cyclone Ana have left the agricultural lands washed away rendering the whole pristine capacity almost halved to some extent. Also the AIP has had some logistical hiccups that have made it difficult for many people to access the fertiliser,” he said.
