The Reserve Bank of Malawi (RBM) has cut Malawi’s gross domestic product (GDP) growth rate for 2024 to 1.8 percent from 2.3 percent projected in May this year.
In its Financial and Economic Review for October 2024, the central bank has attributed the dampened growth to the negative impact of El Nino on agriculture output, foreign exchange shortages and continued inflationary pressure. Last year, the economy grew by 1.9 percent.
This is the second time RBM has trimmed the country’s growth forecast, having cut it from 3.2 percent in April this year at the onset of the 2024/25 fiscal year to 2.3 percent.
Reads the report in part: “The estimated growth rate for 2025 is based on prospects of good weather conditions and positive benefits from the full operationalisation of the mega farm investments, which will support growth in the agriculture industry and all other industries which depend on the agriculture industry for raw materials.”
RBM projects economic deceleration in the agriculture and manufacturing sectors, key pillars in the country’s long-term development plan Malawi 2063, but strong performance in mining and construction driven by government infrastructure projects.
Growth in the agriculture, forestry and fisheries sector is projected to shrink by 0.2 percent in 2024, from a previous forecast of 0.7 percent on account of lower crop yields, particularly maize, according to the RBM.
The sector is, however, expected to rebound to 4.5 percent in 2025 driven by improved weather patterns and the operationalisation of the mega farms
The central bank further anticipates slower growth in the manufacturing sector from 2.1 percent to 0.3 percent and wholesale and retail trade from one percent to -1.6 percent.
However, mining and quarrying sector is expected to remain on its positive trajectory in 2024, with a projected growth of 4.8 percent from 3.1 percent in 2023.
The sector is expected to continue growing in 2025, reaching 5.6 percent supported by ongoing infrastructure projects and
new mining ventures.
Economics Association of Malawi president Bertha Bangara-Chikadza said in an interview yesterday that the persistent downward revisions could prompt questions about the credibility of local economic policies and government execution.
“However, these variances mostly stem from external pressures such as rising global oil prices, currency depreciation, and persistent supply chain disruptions, which continue to impact inflation and economic growth beyond what domestic forecasts might anticipate,” she said.
Scotland-based Malawian economist Velli Nyirongo said the slower growth in agriculture and manufacturing sectors could undermine the country’s efforts to create jobs.
He said: “Given the current economic environment, it is realistic to expect that slower GDP growth will impact job creation, wage progression and business expansion.”
The RBM, however, said the economy is expected to rebound to four percent in 2025 on account of improved agriculture output and mining activities.
