Contradictions have risen over Malawi’s 2019 projected real gross domestic product (GDP) growth government projecting the economy to register a growth rate of seven percent while the World Bank pits growth at 4.3 percent.
The bank has further said growth is expected to decelerate by to 5.3 in 2020 and 5.5 in 2021, declining by 0.2 and 0.4 basis points respectively.
The bank backs its prediction in the January 2019, Global Economic Prospects report titled Darkening Skies, saying risks to Malawi growth are weather shocks and rising financial sector stress.
Reads the report in part: “Weather-related shocks, such as flooding or severe and prolonged drought episodes remain an important risk for many Low Income Countries. A return of the drought conditions experienced in recent years would undermine the ongoing recovery in agricultural production.”
It further says the domestic political considerations could undermine the commitment needed to rein in fiscal deficits or implement structural reforms especially where public debt levels are high and rising.
But in an interview on Monday Minister of Finance, Economic Planning and Development Goodall Gondwe said government is banking on good rains to achieve the projected seven percent growth rate.
“If the rains continue as they are, the country would have a much higher growth rate,” he insisted.
Gondwe further argued that the methodology that World Bank uses to come up with the figures does not take into account a huge amount of development projects that have been undertaken.
“In the past two years, we have had large amounts of money spent on projects. If you have a methodology that takes all that into account, then the growth rate is much higher than what they are projecting,” Gondwe argued.
The minister further said the ministry is now working on new methodology that it will share with World Bank and International Monetary Fund (IMF).
“This then means that the country will have new projections within the year. The Nigerians did that and their figures are much higher. And we are going to do the same,” he said.
Gondwe also said government is disputing that Malawi is the least developed country in the world and would like to demonstrate to the two Bretton Woods institutions that they are using wrong figures.
The Reserve Bank of Malawi growth projections hover around six to seven percent. n