The Economics Association of Malawi (Ecama) says slow growth and contraction of the country’s key economic sectors could increase job losses, worsen welfare and dampen economic outlook.
In a written response on Friday, Ecama president Lauryn Nyasulu observed that poor sectoral performance due to the impact of coronavirus (Covid-19) pandemic has potential to threaten macroeconomic fundamentals and affect the welfare of majority of Malawians.
Her sentiments follow the figures contained in the prerecorded State of the Nation Address (Sona) presented to Parliamengt by President Peter Mutharika on Friday which show that the country’s economic growth will slow to 1.9 percent, which is 3.6 percentage points shy of the earlier projection of 5.5 percent.
Nyasulu’s sentiments also follow the recent published Reserve Bank of Malawi (RBM) Financial and Economic Review 2020 Volume 1 which indicated that Covid-19 is expected to have significant effects on different sectors, including tourism and accommodation; transportation and storage services; agriculture, forestry and fishing, wholesale and retail trade and manufacturing activities.
She said: “The economy is in bad shape because of the impact of Covid-19. The revision of the growth target is consistent with the situation on the ground.
“The restrictions on travel and lockdowns imposed by most countries have affected the global economy and Malawi is no exception.”
“Performance of revenue collection is also expected to be heavily affected as an outcome of the poor performance of the sectors. Agriculture, tourism, construction and wholesale and retail have been hardest hit and yet they are the largest employers.”
For instance, the agricultural sector, which contributes the largest share to gross domestic product (GDP) at 26.9 percent, is projected to grow by one percent this year compared to 4.3 percent in 2019 while the mining and quarrying sector is estimated to grow by three percent this year, down from four percent estimated for 2019.
The manufacturing sector is projected to registera 1.9 percent growth from 5.4 percent in 2019 while growth in the construction sector is estimated to slow down to 3.7 percent compared to an estimated 5.8 percent growth in 2019.
Wholesale and retail trade on the other hand is projected to slow down to 0.7 percent from an estimated growth of 4.4 percent in 2019 while the tourism sector is expected to contract by 9.9 percent this year from 4.8 percent in 2019 and another contraction is expected from the construction sector at 3.7 percent from a growth of 5.8 percent for 2019.
“There is great likelihood of further downward revisions in growth projections in the ensuing months owing to the fact that there is continued uncertainty about the duration and intensity of the pandemic,” reads the RBM report.
Last week, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) urged government to support sectors that contribute significantly to the country’s GDP and those that have economic linkages with these sectors.