Reserve Bank slashes Malawi GDP growth rate forecast

The Reserve Bank of Malawi (RBM) has revised downwards Malawi’s national output as measured by real Gross Domestic Product (GDP) for 2015 by 0.4 percentage points from 5.8 percent to 5.4 percent.

Chuka:RBM projects that the economy will grow by 5.4 percent, a 400 basis points lower than the earlier forecast of 5.8 percent.

Chuka:RBM projects that the economy will grow by 5.4 percent, a 400 basis points lower than the earlier forecast of 5.8 percent.

DIkshit: Malawi was unlikely going to meet its 2015 economic growth projection of 5.8 percent.

DIkshit: Malawi was unlikely going to meet its 2015 economic growth projection of 5.8 percent.

According to latest Monetary Policy Committee (MPC) minutes released Wednesday, the four percentage points revision in the growth rate has been necessitated by a contraction in agriculture due to late on-set of rains, floods and early cessation of the rains.

“The downward revision has been necessitated by a contraction in agriculture due to late on-set of rains, floods and early cessation of the rains,” said RBM Governor Charles Chuka.

Chuka was, however, quick to note that the final impact of the drought on GDP is yet to be ascertained.

An estimated 89 000 hectares of cropland was destroyed by the floods, representing around 2.4 percent of total agricultural land in Malawi.

Chuka said the central bank has observed that inflation continued the downward path to 18.2 percent in March 2015 from 24.2 percent in December 2014, in line with the bank’s projections.

He said inflation is expected to “trend downwards to around 15 percent by June 2015 on account of the stability of the kwacha and favourable international oil prices.”

One of the country’s commercial banks, First Merchant Bank (FMB), indicated last month that Malawi was unlikely going to meet its 2015 economic growth projection of 5.8 percent.

“Reduced agricultural output may have negative consequences both for the country’s balance of payments and its fiscal deficit.Accordingly, although interest rates may decline over the course of 2015, overall monetary policy is expected to be contractionary,” said FMB in a statement of financial position for 2014 signed by Group Managing Director Dheeraj Dikshit and Finance Director John O’Neill.

The World Bank estimated that the recent floods would cost the economy 0.56 percent in 2015 or roughly K12 billion based on the nominal GDP figure estimated at K2.2 trillion. The World Bank also projected the economic growth to be 5.1 percent.

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5 thoughts on “Reserve Bank slashes Malawi GDP growth rate forecast”

  1. Winston msowoya says:

    The economy controlled by weather pattern is undependable full stop.Since independence,Malawi has been relying on weather pattern for thirty years the messiah had been on the throne.To this end,he had created his own system of CROP INPECTION spending millions of public funds touring the nation from south to north.So principally,Malawi relied entirely on agricultural economy which was to say the truth,gave the President an upper hand on national economy.In other words,it was Banda’s personal economy while the overwhelming peasant farmers,struggled to survive. This is one reason that Malawi’s economy stagnated to this day.Manufacturing driven economy was completely neglected.However,Banda’s predecessors do little to diversify the economic trend.In this case,Malawi’s economy already devastated by unprecedented corruption,it will take decades to stabilize until then,our people will have to continue to live in a sinkhole of inferno.

  2. Bokhobokho says:

    Even though the economy depends on weather forecast, cant as a country make use of water that is just flowing freely down to Indiana Ocean. If only the country could take whether you call it loans or grants specifically to look at how best we can use our water, something may come out. God Bless Malawi

  3. chechamba says:

    Some names please DIK (mbolo) and Shit (manyi) did all names finish??

  4. Ty says:

    40 basis points not 400 and 0.4 percentage points not 4 percentage points. Significantly different

  5. ujeni says:

    Economy that depends on rains, no rains no economic growth, what a country what an economy. Malawi need to have an economy it can control not depending on weather forecast.

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