The International Monetary Fund (IMF) expects the Malawi economy to grow by 5.5 percent this year, which is double the growth rate estimated in 2012, managing director Christine Lagarde has said.
The 5.5 percent growth rate is also what Finance Minister Dr. Ken Lipenga meted out last year when he presented the 2012/13 national budget.
Lagarde, who was in the country for a three-day visit from Friday, mentioned the figure when she had an audience with President Joyce Banda at the Kamuzu Palace in Malawi’s capital, Lilongwe.
She also said this when she met the country’s business community led by the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) on Saturday.
“We halved our growth estimate for 2012 to about two percent. But we expect a strong rebound to 5.5 percent this year, assuming strong policy commitment and normal weather conditions,” said Lagarde in her statement titled ‘Malawi economic rebirth, renewed partnerships.’
In 2012, Malawi’s real gross domestic product (GDP) growth rate was earlier projected at 4.3 percent, but a slump in agriculture emanating from a weather-related decline in maize production and the halving of the tobacco crop prompted the Brettonwoods institution to revise growth rate downwards to two percent towards the end of 2012.
Lagarde said she believes that the Economic Recovery Plan (ERP) has laid a foundation for higher and quality growth, but urged Malawi authorities to ensure making economic growth more inclusive by ensuring the development and protection of social safety nets, expanding access to financial services so that everybody including the poor can get access to credit.
“I believe that the key to unlocking Malawi’s potential lies in making it more competitive. This should help with diversification, allowing the country to rely less on agriculture and gain a foothold in newer and promising areas.
“Growth is not merely GDP growth. Growth is about wealth and prosperity for all, opportunity for all, happiness for all, political and economic freedom for all. Growth is also about growing the number of children in school, and young people in jobs,” added Lagarde, ranked one of the influential and powerful women in the world.
She said growth is about increasing the number of mothers who give safe birth in a hospital, and growing the number of families who have plenty of food.
Currently, consumption by most Malawians is depressed as their real income is halved, government spending is constrained in the austerity budget, investors are waiting to see the results of economic reforms, the trade balance is wider in favour of imports and interest rates are high, among others, results of economic ills.
But Lagarde sounded optimistic that with reforms in place, the country is on its tipping point, saying soon inflation will start dropping which will prompt the Reserve Bank of Malawi (RBM) to revisit the bank rate.
“Investors will return and we are confident that growth will resume,” she said.
Lipenga also expressed confidence that the reforms being implemented by government, though painful, will see Malawi’s economy rebounding.
He said the visit by Lagarde sends positive signals to the international community and foreign investors to pour their resources into the country.