Minister of Finance, Economic Planning and Development, Goodall Gondwe has conceded that Malawi is facing economic turmoil following food shortage.
Gondwe said his projection of the economy to rebound from a growth rate of 3.1 percent in 2015 to 5.1 percent in 2016 has failed.
“Growth of economy has been stunted very highly by three percent,” Gondwe said on Friday in an interview monitored on Daybreak Malawi program aired by Capital Radio.
The country’s purse keeper said Malawi’s inflation —a monster that eats into the majority of people’s disposable income—is “high”.
National Statistical Office (NSO) figures show that inflation rate is at 23.6 percent owing to a food deficit and increasing maize prices.
Gondwe said government is in the process of importing more than one million tonnes of maize from Ukraine to fill up the current deficit, hoping that prices of the staple grain on the market will subside.
The Malawi Government Annual Economic Report 2016 projects inflation rate to drop to an average of 19.8 percent this year and an end-period rate of 17.5 percent with food inflation projected at 23.8 percent and non-food inflation at 16 percent.
“Inflation is high, foreign reserves have gone down… It’s catastrophic,” Gondwe said when he painted a gloomy picture on Malawi economy.
Gondwe said “urgent remedies” were needed for Malawi economic recovery.
He nevertheless emphasised that government was working tirelessly to turn things around, without elaborating.
In its annual report of World Economic Monitor entitled ‘Absorbing shocks, building resilience, ` the World Bank attributed the slow growth to the shocks of El Nino powered weather phenomenon.
“The economy will continue to adverse weather effects,” says the report in part.
The World Bank says the recovery process of the economy will continue to be slow, saying it will pick up slowly in 2017.
In its latest Monthly Economic Brief, Nico Asset managers report that Malawi Kwacha lost value by 7.1 percent against the United States dollar in the first eight months of 2016.
According to the Nico outlook, the kwacha will continue to depreciate in the medium to long term on account of existent current account deficits and weak foreign direct investment inflows.
“The Kwacha is expected to continue depreciating as a result of low inflow of foreign currency due to poor performance of the tobacco market sales, low levels of investment and a persistently high inflation rate.
“In the medium to long term, the kwacha is expected to depreciate due to significant current account deficit and weak foreign direct investment inflows despite improved forex reserves,” indicates the report.Follow and Subscribe Nyasa TV :