President Joyce Banda has said the country’s economy expanded by 6.1 percent in 2013, buoyed by an increase in production levels of some key cash crops and improved capacity utilisation in the manufacturing sector.
The 6.1 percent economic growth represents 0.7 percentage points higher than the earlier projected 5.4 percent growth rate.
“Today, I am pleased to report that the growth of our domestic economy for 2013 has been revised upwards to 6.1 percent from 5.4 percent as recorded in September 2013 and is projected to increase to 6.3 percent in 2014,” said the President on Monday at the official opening of the 2014 tobacco marketing season at Kanengo in Lilongwe.
The six percent-plus real gross domestic product (GDP) growth is three-fold the growth rate of 1.8 percent achieved in 2012, on account of a slump in agriculture emanating from a weather-related decline in maize production and a halving of the tobacco output in the year.
Banda said the revision in the growth rate for last year is based on the increase in production of both cash crops such as tobacco and food crops such as maize and rice.
She also attributed the upward revision of the rate to the expansion in the capacity utilisation among manufacturers in the wake of the availability of fuel and foreign exchange.
“In view of the anticipated growth in 2014, annual inflation is expected to average 19.4 percent in 2014 from 27.3 percent average registered in 2013.
Similarly, the end period inflation is expected to ease to 14.2 percent in 2014 from 23.5 percent in 2013 and it is expected to fall further to nine percent in 2015,” she said.
Banda also said she expects interest rates and the kwacha to continue to adjust accordingly in line with recent economic developments.
She said in view of the government’s commitment to sound political and economic governance policies, she was hopeful that Malawi’s development partners will adjust accordingly to support efforts and successes by resuming budget support as soon as possible.
Currently, Malawi’s donors under the Common Approach to Budget Support (Cabs) are withholding $150 million in budget support beginning November last year, angered by revelations of abuse of taxpayers’ money at Capital Hill christened Cashgate.
“My government has remained committed to staying the course with the reforms despite emerging challenges and we will continue building an efficient, transparent and open government as a matter of national choice,” said the president.
According to the Nico Asset Managers February 2014 report, some of the risks to economic growth in 2014 are high inflation and lending interest rates which could slow down economic growth as they reduce private sector activity as well as delays in donor funding.
The report also cites alleged corruption in the public sector as one of the risks to economic growth this year.