By Kingsley Jassi:
Reserve Bank of Malawi (RBM) has dismissed doubts over projections of economic rebound in 2025, expressing optimism that the country’s economy will recover this year.
The central bank projects that the economy would grow by four percent from last year’s dismal growth rate of 1.8 percent.
RBM insists that the projection is on the account of good agricultural production anticipated this season which is expected to outweigh the prevailing challenges.
RBM also says that inflation is expected to slow down to 22 percent while admitting the need to start making the economy produce and reduce consumption.
However, in the Monetary Policy Committee (MPC) statement issued last week signed by governor McDonald Mafuta Mwale, the central bank outlined some risks that include expansionary fiscal policy and forex situation as some threats in the outlook.
“This reinforces the MPC’s position that monetary policy should be complemented by measures that support economic productivity. The committee noted that rising food prices, external sector imbalances and fiscal pressures present upside risks to the expected disinflation in 2025,” the MPC statement reads.
Economics Association of Malawi (Ecama) achieving the projected growth rate would require maximum contributions from all key players beyond the good performance in the agriculture sector.
Ecama Senior economist Lucius Pawa said in an interview after the meeting that Ecama is aligned to the indicated growth projection on grounds of the ongoing agricultural season which promises improved output so far and will likely elevate other sectors along.
He however, urged to be cautious while calling for monetary and fiscal authorities to be working for the same purpose with policy alignment.
“It is important that while we hope for the best we should also do the right things from all areas that include fiscal policy, monetary policy and all other stakeholders. To make an economy perform it is a sum of contributions from different players so it’s our hope that everyone takes part in contributing to this optimism,” Pawa said.
Malawi’s economy has been struggling in the past four years as agricultural production has been limited by weather related shocks while prices of key inputs like fertilizer have also limited productivity
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