Firms positive on economic outlook

Some firms have painted a positive picture of the operating macro-economic environment this year despite weather-related shocks and risks related to the May 21 2019 Tripartite Elections.

In their published financial statements for the period ending December 31 2018, FDH Bank, NBS Bank plc, New Finance Bank (NFB), Standard Bank plc, Sunbird Tourism plc, Mpico plc and National Bank of Malawi (NBM) plc said they expect a decline in inflation and interest rates, stable exchange rates as well as improved gross domestic product (GDP).

Over the past few years, inflation rate, currently at 7.9 percent, has been trending downwards, exchange rate has largely been stable and interest rate a bit softer due to the cut in policy rate to 14.5 percent.

In the financial statement, FDH Bank, which posted a profit after tax of K5.9 billion from a loss after tax of a loss of K1.004 billion the year before, said in the run up to the May 21 2019 Tripartite Elections, government policy and public spending will be influenced by political factors, which may have a negative impact on budget implementation with a wider budget deficit, which is likely to result in additional borrowing.

“However, the bank anticipates the exchange rate to be relatively stable for much of  2019,” reads the bank’s statement in part.

On its part, NBM plc, which registered a 16.6 percent after-tax profit decline to K15.97 billion in the year under review, sees a continuing stable macroeconomic environment resulting in increased commercial activity despite downside risks from floods and power challenges.

Hotel chain Sunbird Tourism Limited plc, which registered profit after tax of K2.5 billion in 2018 from K2.4 billion in 2017, said it expects a stable exchange rate in 2019 and inflation to trend downwards with interest rates to progressively follow a similar trend in the medium-term.

But Sunbird plc says elections may potentially depress economic activity.

NBS Bank plc, whose after-tax profit hit K1.7 billion from a loss of K1.092 billion the year before, said it expects interest rates to trend downwards which will result in increased credit to the private sector in the second half of 2019.

Property development and management firm Mpico plc, which posted a profit after tax of K6.8 billion in 2018 from K5.1 billion in 2017, observed that current economic stability could be impacted by several factors such adverse weather conditions, world oil prices and government policy.

Reserve Bank of Malawi (RBM) spokesperson Mbane Ngwira said the central bank is positive on economic outlook.

University of Malawi’s Chancellor College economics professor Ben Kaluwa said banks’ positive outlook may be backed by the recent regulatory interventions by the central bank.

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