Economics Association of Malawi (Ecama) and Malawi Economic Justice Network (Mejn) have questioned government’s optimism to achieve a real gross domestic product (GDP) growth rate of 5.1 percent this year.
In the 2016/17 proposed National Budget presented two weeks ago in Parliament in Lilongwe, Minister of Finance, Economic Planning and Development Goodall Gondwe projected that the economy is expected to rebound from a growth rate of 3.1 percent in 2015 to 5.1 percent in 2016.
He said although the economy has been depressed by the El Nino weather episode which adversely affected smallholder agricultural production, commercial agriculture has registered an increase.
But Ecama president Henry Kachaje said in an interview on Friday on the sidelines of a Budget Analysis Forum in Blantyre they doubt the optimistic projection by government, arguing that a three percent growth rate could have been more realistic.
He said the conditions the country faced last year that led to the revision of the GDP growth rate from six percent to 3.1 percent are still prevailing.
“Last year, the country faced hunger and the people that were food insecure were about 2.8 million. This year, we are talking about half the population being food insecure which is about eight million people. This makes it difficult for an economy to grow at the said 5.1 percent,” he said.
Kachaje said the situation on the ground has not changed that much as other macroeconomic indicators such as inflation and interest rates still remain high.
He said being an agro-based economy, the country will likely face some negative ripple effects of the hunger that will affect industries that primarily use agricultural commodities as their raw materials.
Speaking in a separate interview yesterday, Mejn executive director Dalitso Kubalasa said government’s assumptions amid the current status of the economy are a bit presumptuous.
He said: “We are seeing that the projections made by government are not based on realities on the ground. For the past five years, we have seen inflation rates hovering at 20 percent which has in turn kept prices of commodities up.