Malawi has improved on the Global Economic Transformation Index to 66 out of 129 countries in 2018 from 90 in 2016, according to the Bertelsmann Stiftung Transformation Index (BTI) published last week.
The 2018 BTI Malawi Country Report indicates that for the past two years, the country has registered economic transformation gains. In 2016, Malawi failed to make economic transformation gains, slipping eight places to 90 from 82 in 2014.
In its country report for Malawi, BTI observes that the country needs significant growth to improve the economic outlook of the country, with the private sector remaining critical for this to happen which would invariably involve making local conditions attractive for foreign investors, since economic growth cannot be generated only by local investors.
“Unfortunately, the country is not rated highly as a destination for foreign direct investment [FDI]. According to the World Bank, Malawi scores 8.0 on the FDI Index, this makes it a less than ideal destination for foreign investment. With the preceding outlook, it is foreseeable that the economy will continue to struggle for the foreseeable future,” reads the analysis in part.
The country’s economy, however, remains undiversified and vulnerable to external shocks.
This year, growth prospects have been dealt a big blow with the combined effects of dry spells and armyworms attack. The current drought is estimated to cut maize production by 40 percent or 210 740 tonnes while army worms would cut output by 10 percent or 73 201 tons.
In his Mid-Year Budget Review Statement, Finance, Economic Planning and Development Minister Goodall Gondwe said if the macroeconomic is managed well as is the case now, the average economic growth rate of Malawi could reach seven percent.
“The more interesting statistics figures that the International Monetary Fund [IMF] have left behind is their strong forecast that if the macroeconomic is managed well as it is now, the economy, as we have emphasised before, the average economic growth rate of Malawi could reach seven percent.
This should give honourable members confidence that the economy is being managed as well as it should. They state that in the medium term [three to five years], growth rates could be high in Malawi. This is the government’s goal. We are determined to emerge out of a group of poorest countries in the world within the medium term,” he said.
Economics Association of Malawi (Ecama) president Chikumbutso Kalilombe is on record as having said that while best bet is to add value to agro processing, there still is light at the end of the tunnel.
BTI aims to measure the effectiveness of the transformation to democracy and an equitable market economy of non-liberal countries. Developed by Bertelmann Stiftung, this index assesses the quality of political and economic liberalism of 129 countries in the world and offers a ranking that combines qualitative, in-depth evaluations with quantitative scores for their performance.