Economist Intelligence Unit (EIU) has revised downwards the country’s economic growth projection for 2019 to 4.9 percent from Treasury’s initial forecast of five percent, weighed down by the impact of Cyclone Idai.
The projection is contained in the Nico Asset Managers Monthly Economic Report for July 2019, which shows that Cyclone Idai impact is estimated to have resulted in production losses amounting to $9.96 million (about K7.3 billion), equivalent to 0.13 percent of gross domestic product (GDP).
The impact, according to the report, is driven by loss in the agriculture, construction, electricity and water, wholesale and retail trade, transport and accommodation and food services sectors.
The Reserve Bank of Malawi (RBM) June Financial Stability Report indicated that domestic economic growth was estimated to increase to five percent in 2019 from 4.1 percent in 2018.
Reads the report in part: “The increase was mainly on account of favourable weather conditions and other interventions such as the Malawi-Zambia Power Interconnection Project which stabilised the country’s power supply since the beginning of 2019.
“These developments resulted in high agricultural produce and adequate power supply, respectively. The positive growth is expected to support financial systems stability.”
Treasury spokesperson Davies Sado on Monday said government’s GDP projection remains five percent, but explained that Treasury will be coming up with its own second assessment to ascertain the situation on the ground and give the latest growth picture.
“We normally calculate growth twice a year thus in February to assess growth projections. This involves all sectors of the economy, including the business community and those who are into various services.
“The officers will check if the microeconomic fundamentals with which we projected growth are still the same or there are variations. It is only when we conclude this exercise that we will be able to ascertain actual growth figures,” he said.
Economics Association of Malawi (Ecama) president Chikumbutso Kalilombe yesterday said while they have not done research to have an informed opinion on the GDP growth, the downward projections indicate economic vulnerability.
“The five percent growth that was initially projected in our current state is not good enough to make meaningful impact on livelihoods of common Malawians.
“We need growth rates of above that sustained for a while to make meaningful impact. The reasons for downward revision show the extent of vulnerability our economy faces,” he said.
An International Monetary Fund (IMF) mission team earlier this year projected the economy to grow by five percent, while the World Bank projected the economy would grow by 4.5 percent supported by a rebound in agriculture and some improvements in electricity generation.
Minister of Finance, Economic Planning and Development Joseph Mwanamvekha recently said Treasury projects GDP growth of seven percent next year on account of planned infrastructure development and continued focus on growth potential sectors. n