…Gwengwe projects 2.7% growth
…no ideas to tame inflation
The Malawi economy only grew 3.2 percent, a 1.2 percent down from the 4.6 percent growth in 2021. The Minister of Finance Sosten Gwengwe has told the National Assembly.
Gwengwe who failed to spell out growth interventions, projected that the economy is expected to slow down further to register 2.7 percent growth this year. There is no hope that even the target will be met.
The Minister has not given any new measures that could spur economic recovery, save for a huge budget deficit, increased domestic borrowing and tax collections that will impact on the poorest most.
In his 2023 budget statement Gwengwe cited energy supply which included both fuel and electricity and weather-related shocks that reduced agricultural output. The Minister also added his usual blame of the ongoing Ukraine conflict as another reason of slow growth.
“Going forward, the economy is estimated to grow by 2.7 percent in 2023 due to expected high yield in agriculture, stabilization of energy supply and increased output in other economic sectors like mining and construction. In 2024, the economy is projected to grow between 3 and 4 percent,” said Gwengwe.
The Minister said inflation had risen to 20.9 percent from a single digit and consumer prices spiralled that was contributed by devaluation of the kwacha.
“Food inflation rose to 31.3 percent in December 2022 from 14.2 percent in January 2022 while non-food inflation rose to 18.6 percent in December 2022 from 9.6 percent in January 2022. The annual average inflation for 2023 is expected to slightly decrease to 18.2 percent due to the expected increase in agricultural output and economic recovery from recent economic shocks,” said the Minister.
With a messed fertiliser programmes, drought and flooding, food situation is likely to be worse and inflation could hit well over 50 percent. Maize is currently selling at an all time high of K40,000 per 50kg bag.
Gwengwe could not say how the government intends to improve the situation only saying the Reserve Bank of Malawi implemented a surrender requirement of 30 percent of exports and, in May 2022, devalued the Malawi Kwacha and hoped that official reserves are expected to recover to above 3 months of import over the medium term.
