The World Bank says the recent trend of weak growth has seen graduation prospects slip further away in many low income countries (LICs), including Malawi, with Ethiopia, Rwanda and Uganda expected to graduate by 2035.
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.
In an analysis Falling Graduation Prospects: Low-Income Countries in the 21st Century, the bank said the economic challenges confronting LICs, including Malawi, have intensified in the last 15 years amid deadlier conflict and violence, climate shocks, debt crises, and anaemic growth.
These, the bank said, have slowed the rate at which LICs are graduating to middle-income status since 2010, with per capita GDP near-flat lining for 15 years.
Said the bank: “As a consequence of these trends, extreme poverty has ceased falling in LICs. Moreover, at average 2010/2019 growth rates, only six LICs would be expected to graduate to middle income by 2050.
“This would represent less than one-quarter of eligible countries, down sharply from the nearly two-thirds that advanced in the first quarter of this century.”
The World 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.
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).
National Planning Commission (NPC), an oversight government agency on MW2063 implementation, 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.
NPC director general Thomas Chataghalala Munthali earlier conceded that the country’s target to attain a middle income status faces setbacks if the country continues to record minimal growth.
“Any deceleration on growth due to exogenous shocks and resultant macroeconomic instabilities definitely has impacts on the timely attainment of Malawi Implementation Plan-1 milestones,” he said.
In an interview on Tuesday, economist Exely Silumbu observed that one of the key targets of development is for low-income economies to catch up with the level of development of rich countries in terms of per capita income.
“This explains the worry in some quarters of the mediocre growth rates of some low-income economies,” he said.
On his part, economist Dalitso Kubalasa said compared to nations such as Ethiopia and Rwanda which have invested heavily in industries and better public finance management systems and governance, Malawi continues to struggle to keep up.
“However, this does not mean all hope is lost. Malawi still has tremendous potential,” he said.
For Malawi to graduate into the lower middle-income bracket, it needs to reach a gross national income (GNI) per capita of $1 086 (about K1.9 million).
However, NPC data shows that between 2018 and 2023, GNI per capita increased by 25 percent from $500 (K875 500) to $623 (about K1 million).
