By Kingsley Jassi:
Economic experts have expressed reservations over the government’s 4 percent economic growth projection for 2025.
They argue that it will be challenging for the economy to achieve the feat, considering current economic conditions that are limiting productivity and could potentially spill over into the coming year.
In the mid-year budget statement, the Minister of Finance Simplex Chithyola Banda, while revising this year’s growth projection downwards from 2.3 percent to 1.8 percent, remained optimistic that the economy would recover with a 4 percent growth rate—a slight downward revision from the earlier projected 4.3 percent.
But the experts have cautioned the government to be moderate with its projections to avoid planning based on unrealistic expectations that often lead to economic adversities.
In a written response, finance expert Bond Mtembezeka said the 4 percent growth rate is ambitious because in previous years, when economic fundamentals were relatively stable, Malawi would grow around 3 to 4 percent.
He emphasised that driving higher growth requires joint effort between government and the private sector.
Mtembekeza noted that the government has a larger role in ensuring a favourable economic environment for private sector operations and investments, highlighting critical areas such as public debt, inflation and foreign reserve levels that need addressing.
“Currently, we still face serious foreign exchange shortages, high inflation and an uncertain crop outlook due to irregular rainfall patterns. There are more downside factors than upside ones.
“Policy inconsistencies and a disregard for necessary actions have contributed to Malawi running in circles,” Mtembezeka said.
In a separate interview, economist Lesley Mkandawire stressed the need for deliberate moves to achieve such a high growth rate, especially given the modest current growth of 1.8 percent and an unpromising regional weather outlook.
He pointed to consistently overestimated revenue estimates in national budgets as a key driver of high public debt levels affecting macroeconomic conditions.
“We must debate our projections, both for growth and expenditure, as they consistently create challenges when missed. Perhaps we need to re-examine our projection model, which may not account for contextual factors.
“Even when signs indicate we’ll miss revenue projections, expenditure isn’t reduced, leading to increased borrowing. We can achieve higher growth rates by making strategic investments in high-potential areas,” Mkandawire said.
Malawi’s economy has been growing moderately at 1.5 percent on average over the past four years since the Malawi 2063 development blueprint and its first 10-year implementation plan were launched—a level that has thus far put the 2030 goals out of reach.
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