The African Development Bank (AfDB) has projected a modest 5.2 percent economic growth this year up from five percent last year supported by a rebound in the agriculture sector.
The pan-African bank says prudent policies, improved external financing, favourable terms of trade and increased investments in connectivity infrastructure along major trade corridors, will also support the growth.
In its African Economic Outlook 2020 report, AfDB said gross domestic product (GDP) growth prospects for the next few years are positive due to the expected improved electricity supply.
The projection comes weeks after the World Bank projected a 4.8 percent GDP growth this year, which is way below Malawi Government projection of seven percent.
Minister of Finance, Economic Planning and Development Joseph Mwanamvekha has maintained the seven percent growth rate, saying it will be pushed up by planned infrastructure development and continued focus on growth potential sectors.
The ambitious projection is three percentage points above a growth rate of four percent achieved in 2018 and two percentage points above the 2019 projected real GDP growth rate of five percent.
AfDB has recommended that maintaining accommodative policy could propel capital flows, increase economic activity, and restore growth, since it supports credit to the private sector.
The government has proposed to strengthen value addition through the Special Economic Zone (SEZ) Bill to regulate exports through a national export strategy.
The Bill proposes multiproduct SEZs for oil seeds, sugar cane, beverage manufacturing and agro-processing and that Malawi will also prioritise exports of tea, legumes, oil seeds and minerals.
University of Malawi’s the Polytechnic economics lecturer Betchani Tchereni hinted that growth for the economy is certain and it would grow closer to government’s seven percent projection.
He said apart from agriculture, the service sector is beginning to grow, contributing to the economy although with challenges.
The sector is dominated by banking and insurance services, among others.