Goodall adamant on 7% growth projection
Finance, Economic Planning and Development Minister Goodall Gondwe has downplayed a recent barrage of criticism surrounding the projected 2015 real gross domestic product (GDP) growth of seven percent underpinning the proposed 2015/16 National Budget.
Gondwe used his 2015/16 winding-up statement in Parliament on Monday to say the domestic economy has demonstrated strong resilience that should propel the economy to a much higher growth rate as was the case some five years ago.
Between the period 2005 and 2010, Malawi’s real GDP growth rate was estimated to have averaged 7.5 percent annually.
Said Gondwe: “Our view in the Treasury is that, barring the occurrence of natural calamities, we should be able to establish a better macroeconomic position.”
The seven percent growth rate projection as envisaged by the minister this year is way above the six percent sub-Saharan threshold deemed to have a meaningful impact on poverty alleviation.
The International Monetary Fund (IMF) and the World Bank, according to Gondwe, have commended Malawi on the resilience of her economy as the country has been able to perform well although certain aspects of macroeconomic parameters are yet to be stabilised.
Gondwe explained that, in particular, with the importation of maize to neutralise the emerging shortage, the country should be able to reduce inflation and to stabilise the exchange rate.
He said reducing inflation further will in turn necessitate lower interest rates.
“We have to aim high to attain good results. We will end up very low if we start with a despondent view in the name of realism,” added the minister.
Soon after presenting the budget, most economic commentators including the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) and the Economics Association of Malawi (Ecama) questioned Gondwe’s optimism about a favourable macroeconomic environment.
According to the commentators, the economy is currently enshrouded by a weak macroeconomic situation that was worsened by the January floods.
However, a recent Post-Disaster Needs Assessment (PDNA) jointly conducted by the World Bank, the European Union (EU) and the United Nations (UN), quantified total economic impact of the floods at K15.9 billion (about $35.8 million) or an equivalent of 0.6 percent of GDP.
Richard Record, World Bank acting country manager, told Business Review such an impact on economy is somehow ‘muted’ as it will be offset by reconstruction efforts financed through increased foreign grants.
