Malawi growth estimate revised down to 1.9 % -IMF
The fragile state of Malawi’s economic recovery was thrown into focus once more Thursday as the International Monetary Fund (IMF) announced the country’s growth was slowing in manufacturing and agriculture.
IMF mission chief Tsidi Tsikata said in Malawi’s capital, Lilongwe on Thursday that it has revised its growth forecast for Malawi for 2012 to 1.9 percent from 4.3 percent .
“Drought conditions in parts of the country have dampened the near term outlook for growth, contributed to a spike in inflation and left nearly 2 million people facing food deficits,” Tsikata said.
“Real GDP growth is estimated to have slowed from 4.3 percent in 2011 to 1.9 percent in 2012 mainly due to contraction in output from the agriculture and manufacturing sectors,” he added.
The IMF chief pointed out that the pace of recovery in several other sectors has been slower than expected.
“Although the private sector has cleared a substantial amount of external payments arrears, external credit lines have not yet been re-established as creditors have adopted a wait-and-see attitude. In this regard, the mission welcomed the resumption of implementation of the automatic price adjustment mechanism for petroleum products last week, after a month long delay.”
IMF said the continuing depreciation of the exchange rate, rising inflation and unforeseen difficulties in the implementation of social protection programmes”are among the principal challenges “ Malawi government currently face.
“The mission discussed the scope of tightening monetary and fiscal policies to stabilise the exchange rate and contain inflation,” Tsikata said.
He disclosed that the IMF mission has reached staff-level understandings with the authorities on policies for completing the first Malawi’s Extended Credit Facility (ECF) review.
Consideration by the IMF’s Executive Board is tentatively scheduled for December.
“Completion of this review will enable Malawi to receive a disbursement of SDR 13.02 million (US$19.9 million) from the IMF.”
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