GDP growth rate Revised downward
At a time the economy continues to tank, government has formally accepted that 2016 real gross domestic product (GDP) growth forecast was optimistic and has revised it downwards by 2.2 percentage points to 2.9 percent.
Treasury spokesperson Nations Msowoya, in an interview yesterday, blamed the downward revision on supply side bottlenecks that include intermittent power and water supply and high interest rates.
Minister of Finance, Economic Planning and Development Goodall Gondwe earlier projected that the economy will rebound from a growth rate of 3.1 percent in 2015 to 5.1 percent this year, but did not indicate the basis for the assumptions at a time output from agriculture-the main driver of the country’s economy-and dropped.
Economic analysts also questioned Gondwe’s optimism at a time all economic sectors, including banking and mining showed signs of fragility.
The growth rate revision is line with estimates by international organisations such as International Monetary Fund (IMF), which put this year’s growth rate at three percent, African Development Bank (AfDB) at four percent, Economist Intelligence Unit (EIU) 3.1 percent and World Bank 2.6 percent.
But Msowoya said despite the economy having been depressed by El Nino weather episode, which adversely affected smallholder agricultural production, commercial agriculture has registered an uptick, but could not provide the figures.
However, he said government is optimistic that the situation will be better next year, pinning hopes on intensified irrigation farming.
He said: “As a long-term measure, we are pushing for the Development Bank and working on issues that will stablise the economy so that [commercial] banks are able to lend and stick to our continued efforts to spend within budget”.
Msowoya said, among others, government will be working on stablising the economy by being frugal in spending to avoid unnecessary domestic borrowing and extra budgetary expenditure.
In view of the power deficit, Minister of Natural Resources, Energy and Mining Bright Msaka said Electricity Supply Corporation of Malawi (Escom) Limited will install a 46-megawatts (MW) diesel power plant, 70MW of PV solar power from Independent Power Producers (IPPs) and enforce the use of energy saver bulbs which will save between 30MW and 50MW.
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) public private partnership manager Hope Chavula yesterday said the GDP growth rate revision is not surprising as the water and electricity situation has dampened business prospects for the private sector.
Earlier, Malawi Economic Justice Network (Mejn) and Economics Association of Malawi (Ecama) also questioned government optimism to achieve a 5.1 percent growth rate.
Since 2009 when Malawi’s economic growth rate, at 8.3 percent, was second only to oil-rich Qatar, growth has been fluctuating. In 2010, growth slowed to 6.7 percent and slowed further to 4.3 percent and 1.9 percent in 2011 and 2012 respectively.
In 2013, growth picked up to 6.1 percent and went up again to 6.2 percent in 2014. n
