Economists Association of Malawi (Ecama) says it is likely that Malawi’s prospects of becoming a low middle-income country by 2030 will be pushed further back.
The sentiments come in the wake of a World Bank assessment that the recent trend of weak growth has seen graduation prospects slip further away in many low income countries (LICs), with only Ethiopia, Rwanda and Uganda expected to graduate by 2035.
In an interview on Tuesday, Ecama president Bertha Bangara-Chikadza said although the country’s per capita gross domestic product (GDP) has increased by over 50 percent over the past 30 years, the growth is insufficient to “significantly” raise living standards and close the gap with neighboring countries.
She said: “The World Bank’s pronouncement does not come as a surprise, considering Malawi’s growth trajectory in recent years. Malawi’s economic growth decline is attributed to various shocks, including lack of foreign exchange, which led to the devaluations of the Malawian kwacha in the past few years.
“Malawi’s growth prospects are further impacted by weather shocks, and huge funding gaps. Given these challenges, it’s likely that Malawi’s prospects of becoming a low middle-income country by 2030 will be pushed further back.”
On his part, development economist Frederick Changaya observed that policies have failed to elevate Malawi.
He said: “We have good plans on paper. We have good political intent. But our policies, fiscal and monetary and the fidelity of implementation of the policies by far speak to growth factors.
“Whatever we have been doing, especially tightening of the policy stance, moved Malawi backwards. We are retrogressing while Tanzania, Zambia, even Zimbabwe are all above $1 200.”
According to the bank, by 2050, only another three LICs would be expected to make the transition.
In other words, based on 2010/19 average growth rates, the number of LICs would decline by less than a quarter, from 26 this year to 20 in 2050.
This could push Malawi’s prospects of becoming a middle income status further.
Published World Bank data show that between 2010 and 2019, poverty headcount ratio has increased from 68.4 percent to 70.1 percent, GDP per capita has moved from $224.2 to $580.9 while growth has averaged 4.41.
Malawi has been on a quest to turn into a wealthy, self-reliant, industrialised upper-middle-income economy by 2030 as outlined in the Malawi 2063 (MW2063).
Implementers of MW2063, National Planning Commission (NPC) said now the local economy needs to grow by at least 10 percent annually in the next six years, from an earlier projection of six percent, if the country is to attain a middle income status.
For Malawi to graduate into the lower middle-income bracket it needs to reach a gross national income (GNI) per capita of $1 086.
However, NPC data show that between 2018 and 2023, GNI per capita increased by 25 percent from $500 to $623.
NPC director general Thomas Chataghalala Munthali earlier conceded that the country’s plan to attain a middle income status faces setbacks if the country continues to record minimal growth.
In an analysis titled ‘Falling Graduation Prospects: Low-Income Countries in the 21st Century’, the bank said most LICs can improve growth prospects by prioritising policy shifts shown to foster greater investment, including prudent fiscal policies, deeper trade integration, and improved governance and monetary frameworks.
In 2000, 63 emerging market and developing economies were classified as LICs. They were home to more than 60 percent of the 1.8 billion people.
