IMF forecasts 4.3 % growth for Malawi

The International Monetary Fund (IMF) has forecast Malawi’s economic growth rate for 2012 at 4.3 percent which contrasts sharply with government’s projected 6.6 percent growth rate for the year.

This means economic challenges in Malawi are likely to continue as standards of living for most people deteriorate.

In its April World Economic Outlook (WEO) released in Washington DC last week, IMF forecast that Malawi will attain an annual real GDP of 4.1 percent in 2013 and 2017, respectively.

A 4.1 percent GDP growth rate is lowest Malawi has achieved in a decade.

“This low growth rate forecast by IMF simply highlight more economic challenges our economy is facing and could result in more job losses in the medium to long-term,” said a government economist who opted for anonymity.

Experts generally agree that developing countries should at least grow by an average of six percent to reduce poverty.

IMF forecast comes a month after the Economic Intelligence Unit (EIU) in its March 2012 economic outlook also painted a gloomy picture for Malawi, saying growth will remain subdued in 2012 and 2013.

EIU attributed the slow growth forecast to low maize production, slow uranium production, cuts in foreign aid and foreign exchange cash shortages.

Last year, Malawi grew by six percent from an earlier estimated 6.9 percent shelved by reduced disposable income due to poor tobacco prices, scarcity of foreign exchange and intermittent power supply, according to Finance and Economic Planning Minister Dr Ken Lipenga’s mid-term review statement. In 2008, Malawi’s economic growth rate was estimated at 9.7 percent, a rate which was highly touted as the fastest growing economy after oil-rich Qatar.

Bumper yields of maize, which is Malawi’s staple food, has over the years supported the country’s economic growth pillars.

Growth rate has over the years averaged seven percent as a result of bumper maize harvest, thanks to the Farm Input Subsidy Programme (FISP) which government embraced in 2005.

But, recently,   the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) queried the declining trend in the country’s growth rates and described the basis of such growth rates as “shaky.”