Malawi is still struggling to attain the desired gross domestic product (GDP) growth rate to enable the successful implementation of the United Nations (UN) Sustainable Development Goals (SGDs) to be attained by 2030.
This is according to a June 2022 Voluntary National Review (VNR) coordinated by the National Planning Commission in collaboration with the Ministry of Finance and Economic Affairs, with technical and financial support from UN Agencies.
The VNR shows that since the implementation of the SDGs in 2016, Malawi’s economic growth has averaged 3.5 percent, which is a 2.5 percentage points below the SDG target of seven percent.
Reads the VNR in part: “In 2021, the economy rebounded and grew by 3.9 percent. This uptick followed the relaxation of the Covid-19 preventive measures.
“Consequently, the resumption of economic activities boosted growth in most economic activities, including mining and quarrying, accommodation and food services, transportation, wholesale and retail, health, agriculture, electricity, water, gas and manufacturing.”
The review shows that in 2022, growth is anticipated go upward, reaching 4.1 percent, which is still lower than the SDG target of seven percent.
Development economists argue that for Malawi to achieve the middle-income status by 2030, it is supposed to register a six percent growth annually.
In an accompanying statement to the VNR, Minister of Finance and Economic Affairs Sosten Gwengwe said Malawi is pursuing an “inclusive wealth creation and self-reliance” agenda to ensure that the country achieves the middle-income status by 2030 in an inclusive way that also benefits the poorest and most marginalised.
He said that the socio-economic impact of the Covid-19 pandemic has adversely affected the trajectory.
Said Gwengwe: “The Covid-19 pandemic had a significant impact on the labour market. At its peak, approximately nine percent of the labour force stopped working. A large share of small family-owned businesses reported earning less revenue from sales after March 2020.
“In addition, 88 percent of businesses in the services sector reported lower or no sales revenue. During the VNR, most Malawians, especially the youth, lamented the lack of job opportunities from the lack of robust industries with the capacity to generate jobs; and corruption, which resulted in underserving individuals getting jobs.”
Recently, the International Monetary Fund (IMF) and the World Bank cut Malawi’s growth projection for 2022 to 2.7 percent and 2.1 percent, respectively, citing global economic disruptions, largely induced by the Russia-Ukraine war.
IMF said while the war in Ukraine has triggered a costly humanitarian crisis, economic damage from the conflict will contribute to a significant slowdown in global growth in 2022.
Meanwhile, the World Bank said Malawi can restore short-term economic stability through a package of reforms such as flexible exchange rate management, fiscal consolidation and debt sustainability.
According to the bank’s country manager Hugh Riddell, the proposed policy mix can provide confidence to the market and unlock a private sector response.
He said a more diverse economy will create resilience, but in the short-term targeted and sustainable safety nets can protect household assets through difficult times.
The 2022/23 National Budget was formulated on the assumption that real GDP will grow by 4.1 percent in 2022 and 4.0 percent in 2023, with an average inflation rate of 9.1 percent during the fiscal year.