Climate change threatens GDP per capita, says IMF


 Malawi could be losing about one percent of its gross domestic product (GDP) per capita due to effects of climate change, a published International Monetary Fund (IMF) paper has indicated.

In the paper titled Long–Term Macroeconomic Effects of Climate Change: A Cross Country Analysis, the global lender says that persistent changes in climate change have long-term negative effects on the country’s economic growth; hence, the need for authorities to engage an extra gear in their efforts to mitigate climate change impact.

Natural disasters have had a huge impact on economy

Reads the paper in part: “We find that per capita real output growth is adversely affected by persistent changes in the temperature. Our counterfactual analysis suggests that a persistent increase in average global temperature by 0.04 degree Celsius per year, in the absence of mitigation policies, reduces real GDP growth per capita.”

For the past 55 years, Malawi’s GDP per capita, a measure of a country’s standard of living, has been stagnant and minimal at about $400 (about K296 000) per person per year; hence, a decline in the same means poverty levels in Malawi would worsen.

At $400, Malawi’s GDP per capita is the lowest compared to other countries in the region such as Zambia, Rwanda, Kenya and Ethiopia.

Authorities have cited a number of factors that have affected the country’s economic growth with climate said to be the major contributor as all recessions have been preceded by droughts.

In an interview last week, Reserve Bank of Malawi (RBM) spokesperson Mbane Ngwira said agriculture being the dominant sector in terms of contribution to economic growth, climate change shocks have had a bearing on the economy and led to volatility in the key macroeconomic fundamentals.

Ministry of Finance, Economic Planning and Development spokesperson Davis Sado is, however, upbeat that various projects being implemented by government will help counter climate change effects.

He said that currently, government through Ministry of Natural Resources, Energy and Mining with funding from UNDP-GEF Least Developed Countries Fund, is implementing the Adapt Plan Project.

“This is a project that encompasses a set of community-led activities whose aim is to act as a cushion to neutralise challenges which affect Malawi communities in the wake of the negative climate change impacts,” he said.

Sado said the adaptation plan project being implemented in Nkhata Bay, Zomba and Ntcheu districts are focusing on promotion of agriculture, forestry and water.

“Overly, communities are involved in innovative interventions that enable them to become more resilient to climate change shocks,” he said.

Economic commentators have since challenged the country to look beyond what are traditionally considered drivers of the economy.

“Only when we look beyond what we think are drivers of the economy then we can improve our poverty levels,” said University of Malawi’s Chancellor College economics professor Ben Kaluwa.



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