World Bank cuts growth forecast
The World Bank has slashed Malawi’s growth projection for 2022 by 0.9 percentage points from an earlier forecast of three percent to 2.1 percent.
At 2.1 percent, the projection is also a decline from the bank’s 2021 growth estimate for the country of 2.8 percent.
In its April 2022 Malawi Poverty Outlook, the multilateral financial institution said the reduction is largely due to weather-related shocks, macro-fiscal imbalances,and the impacts of the Russia-Ukraine war.
Reads the report in part: “The late onset of rains has been compounded by heavy rainfall and floods caused by tropical cyclones Ana and Gombe, which have negatively impacted production of key export crops and other sectors that rely on agricultural inputs.
“Electricity disruptions from the damaged Kapichira Hydro electric Power Station are affecting industry. The Russia-Ukraine conflict has impacted the economy through both direct price effects and implications on downstream activities.”
The bank further said instability in global commodity markets is resulting in higher prices for fuel and fertiliser, further constraining foreign currency reserves and exerting downward pressure on the exchange rate.
World Bank data shows that agriculture, industry and services sectors are projected to grow by negative three percent, two percent and 4.4 percent, in that order.
Based on various institutions’ projections, the economy is expected to grow by an average of 3.15 percent in 2022.
The government’s 2022 growth projection is higher than other institutions at 4.1 percent, while the Economist Intelligence Unit has forecast 2.8 percent and the International Monetary Fund at 2.7 percent.
The government’s projection was worked out taking into account economic recovery measures it is implementing as contained in the Socio-Economic Recovery Plan as well as the normalisation of global supply chains.
However, in March 2022 Monthly Economic Report, Nico Asset Managers observed that the government’s 2022 projections did not take into account the spill-over effects of the war in Ukraine which have caused other institutions to revise growth downwards.
Economics Association of Malawi executive director Frank Chikuta earlier said while government’s projections could be attainable, there are significant risks, especially for the 2022 growth related to both the agriculture and non-agriculture components of gross domestic product.
