RBM cuts sectoral growth projections
The Reserve Bank of Malawi (RBM) has cut growth projections for various economic sectors, largely due to a subdued economy hit by rising inflation, a volatile exchange rate and scarcity of foreign exchange.
In its Financial and Economic Review for the Second Quarter, the RBM has cut growth projections for agriculture and mining, which are part of the agriculture, tourism and mining (ATM) strategy, which is government’s broader agenda for boosting economic growth.
The data shows that growth in agriculture, the main driver of the economy, has been cut from the initial 1.9 percent to 0.7 percent while mining growth is expected to ease to 4.2 percent from 5.8 percent as earlier projected.
On the other hand, growth in manufacturing has been cut by half from 4.4 percent to 2.1 percent, according to the RBM.
The financial services sector growth has been cut to 4.2 percent from the earlier projected 6.7 percent.
Reads the report in part: “In 2024, growth in agriculture, forestry and fishing is projected to remain constant at 0.7 percent.
“The outcome is mainly reflective of the El-Nino weather conditions and low input uptake experienced during the 2023/24 agriculture season which affected crop output.”
It further said the construction sector’s growth in 2024 is estimated at 5.3 percent, marginally down from a growth of 5.8 percent in 2023.
“The slowdown is mainly on account of foreign currency shortages which affected the availability of raw materials for the industry,” reads the report.
Meanwhile, the report has attributed the anticipated sluggish growth of the information and communication sector to the reduced household disposable income on account of the high inflation rate.
The sectors’ growth review comes months after the RBM also revised downwards the country’s gross domestic product (GDP) growth forecast from 3.6 percent to 2.3percent owing to continued economic challenges such as high inflation and low agricultural output among others.
In an interview on Monday, National Planning Commission director general Thomas Chataghalala Munthali, while describing the revision of growth estimates as normal, said the changes can affect budget interventions as revenue projections are based on projected economic growth.
He said: “Efforts are made to ensure that the projections reflect these factors as much as possible, but they are what they are, projections based on assumptions.
“When these factors don’t turn out as expected, then revisions are necessary.”
Munthali said the challenge is that the revenue projections are based on levels of the projected economic growth and the national budget interventions get affected due to low revenues.
In a separate interview on Monday, Economics Association of Malawi acting president Bertha Bangara Chikadza said although the nature of growth estimates require periodic revisions, frequent revisions can affect economic planning.
The World Bank earlier revised downwards Malawi’s GDP growth forecast from 2.8 percent to two percent in its April 2024 Malawi Macro Poverty Outlook.
