The World Bank has urged Malawi to invest in agricultural resilience to spur economic growth in 2017.
The Bretton Woods institution said Malawi needs to develop a better system to mitigate agricultural shocks while continuing fiscal discipline to set itself on an economic growth recovery path in 2017.
This is the message of the third Malawi Economic Monitor (MEM), titled Absorbing Shocks, Building Resilience, released on Wednesday by the World Bank.
The latest economic analysis for the country presents a review of recent economic developments and a macroeconomic outlook, and explores issues related to agricultural risk management.
The report said growth for 2016 is projected to remain weak, with the late onset of rains and erratic dry spells having depressed expectations for agricultural production.
“Were it not for a second year of weather-related shocks, Malawi would likely be starting to see signs of a growth recovery, especially supported by the progress being made in fiscal control,” said Richard Record, World Bank senior country economist for Malawi and lead author of the report.
The report observes that in 2015 Malawi saw a gross domestic product (GDP) growth rate of just 2.8 percent as a result of adverse weather conditions and macroeconomic instability.
The double shock of drought and floods in 2015 reduced agricultural production, leading to food shortages which in turn pushed up the rate of inflation.
A consecutive year of drought has led to another poor performance in the agricultural sector with continued large food shortages and GDP growth now expected to be just 2.6 percent in 2016.
But the bank said key ways to promote agricultural resilience can include connecting farmers to markets and strengthening farmer capacity to take up risk management practices. Measures to promote freer trade in agricultural products, and to reduce price distortions and volatility would also help to boost incentives to invest and produce.
“Improved transparency and clearer roles of the key institutions that intervene in maize markets—namely the Strategic Grain Reserve and the Agricultural Development and Marketing Corporation—will also be needed in order to promote fairer agricultural markets,” reads the report in part.
The Malawi Economic Monitor (MEM) series of bi-annual reports draws on international experience and best practice to provide up-to-date information and analysis on Malawi’s economy. The aim is to foster better informed policy analysis and debate regarding key challenges that Malawi needs to address in order to achieve high rates of stable, inclusive and sustainable economic growth through an in-depth analysis of economic trends and a macroeconomic outlook. The earlier editions of the MEM issued in 2015 were Managing Fiscal Pressures and Adjusting in Turbulent Times. n