The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has projected a rebound of the manufacturing sector with growth projected to pick up from 3.6 percent registered in 2018 to 4.6 percent in 2019.
This is unlike the earlier projected figures by the Reserve Bank of Malawi (RBM) which predicted a slow-down in the sector’s growth from 3.8 percent to 3.6 percent in 2018 and 2019, respectively.
In its 2019 First Quarterly Economic Review, MCCCI says it is banking on improved performance in part due to stable electricity power supply, as well as the reduction in lending rates.
RBM’s Monetary Policy Committee (MPC) revised downwards the Policy rate to 14.5 percent from 16 percent and cut the Lombard rate from 200 basis points to 40 basis points above the policy rate, thereby closing January 2019 at 14.9 percent.
The Lombard rate is now being used as a base lending rates for all commercial banks. Since then, commercial banks have revised their base lending rates to the Lombard rate which represents a difference of 10.6 percent from the previous highest base lending rate of 25.5 percent.
Meanwhile, the chamber, headed by chief executive officer Chancellor Kaferapanjira, has since cautioned on the rising public debt which it says threatens economic gains emanating from the stable macroeconomic fundamentals the country has experienced for the past two years.
“In addition, the rise in public domestic borrowing continues to threaten private sector development, and that of the economy as a whole, as it has the potential to crowd out financial resources that could have been used for productive purposes. Unplanned expenditures during the forthcoming tripartite elections period are also likely to exert more pressure on the already ballooning domestic public borrowing in the first quarter of 2019,” reads the report in part.
Ironically, credit to the private sector also registered a decline of K9.7 billion from the fourth quarter of 2018 to K447.1 billion at the beginning of the first quarter of 2019. In terms of sectoral distribution, wholesale and retail sector continues to claim a greatest portion of private sector credit at 26.4 percent as at January end 2019.
RBM Governor Dalitso Kabambe has faulted Treasury and legislators for being responsible for the country’s soaring debt which is affecting the management of the country’s economy.