Minister of Finance Felix Mlusu remains upbeat about the country registering economic growth of 3.5 percent this year, banking on the normal to above normal rains despite risks arising from the Covid-19 pandemic.
The minister said this on Friday in Lilongwe when he presented the Mid-Year Budget Review Statement in Parliament.
While admitting that the economy continues to suffer from the adverse effects of the Covid-19, which compelled the government to impose containment measures, Mlusu said the economy will still register higher growth compared to last year.
He said: “Internationally, Malawi’s economic activities have been hampered by border closures in neighbouring countries as well as containment measures in major trading partners such as South Africa, Europe and China.
“But going forward, a preliminary gross domestic product growth rate for 2021 is forecasted at 3.5 percent.”
Mlusu said although localised dry spells are being experienced in some districts mostly in the Southern and Eastern regions of Malawi, growth in 2021 will also be significantly bolstered by the expected increase in agriculture output due to the impact of the Affordable Inputs Programme.
He said: “Enhanced growth prospects in 2021 are also buttressed by the on-going Government infrastructure development projects in the road, energy and agriculture sectors, most of which are growth enablers.
“Furthermore, just as in many other countries, the Covid-19 vaccine is also expected to spur business and economic confidence. It is however, important to remember that economic growth in 2021 and beyond is dependent on how fast the second wave of the pandemic dissipates.”
Meanwhile, latest government figures indicate that in 2020, the Malawi economy grew by a paltry 0.9 percent, down from a projected growth of 1.9 percent.
The Reserve Bank of Malawi (RBM) has indicated that domestic economic growth prospects remain uncertain in 2021 owing to the rising Covid-19 cases, which have necessitated restrictions and new measures to contain the spread.
In the first Monetary Policy Statement this year, RBM Governor Wilson Banda noted that since the beginning of 2021, the Covid-19 infections and fatalities have increased sharply and this has compelled the government to re-impose strict containment measures.
In its January economic report, Nico Asset Managers also observed economic outlook faces considerable downside risks, including the impact of the Covid-19 pandemic, weather shocks and fiscal slippages.
Last year, despite a robust performance in the first half owing to a strong harvest and substantial government spending, economic activity in the second half of 2020 suffered from a further deterioration of the global economic outlook.