Reserve Bank of Malawi (RBM) says it is positive the economy will still grow by the projected five percent despite some disruption of businesses due to demonstrations and prolonged power blackouts.
RBM Governor Dalitso Kabambe on Wednesday banked his projections on the stable inflation rate, exchange rate and global fuel prices.
He said: “Our projection is data intensive. In the case of Malawi, our projections are normally done in February and September after collecting data and conducting business interviews where business captains give us information.
“We cannot speculate based on what is happening out there, but we use available data. As Reserve Bank of Malawi, we still stick to our numbers because we know our model of projection is the best other than speculations”.
Kabambe said the central bank is aware of cases where some institutions such as the International Monetary Fund (IMF), the World Bank and the African Development Bank (AfDB) come up with their own projections which he admitted can become confusing.
He said the central bank is looking forward to the time when all monetary institutions in the country will agree on growth numbers.
The governor said recently he raised the issues with the IMF on the need to work together to address the issues on varied economic projections, since it is the issue of modelLing, weaknesses in data collection, they need to address to same page.
There have been varied projections of the economic growth from RBM, IMF and the World Bank, which begs questions on who is right or wrong.
In 2019, the IMF projects the country’s economy to grow by 4.5 percent.
However, the World Bank stated that in 2019, Malawi’s economic growth is projected to reach 4.4 percent, increasing over the medium-term to 5 to 5.5 percent.
It said growth in 2019 is buoyed by a good harvest overall, despite the impact of Cyclone Idai and that solid agricultural growth is likely to support agro-processing and households’ disposable incomes, which should, in turn, drive the service sector.
However, the bank hinted that the political impasse that has prevailed in the country following the May 2019 elections will weigh on growth.
AfDB projected that gross domestic product (GDP) is to grow by 4.6 percent in 2018/19 and 5.6 percent in 2019/20.
It also said agricultural improvements, stable macroeconomic fundamentals, the recovery in global commodity prices, and continued foreign direct investment inflows are projected to drive growth.
Economics Association of Malawi president Chikumbutso Kalilombe said monetary authorities needed to revise downwards the projections to reflect the situation on the ground.
He said: “We have always made it clear including during pre budget consultations that our growth projections needs to be revised downwards a bit because there are some fundamental situations on the ground that points that it will be tight to achieve the projected growth. “We are watching closely on the impact emerging issues will bear on growth but in our uninformed analysis we feel downward revision is necessary.