Malawi to slip into economic recession as Covid-19 takes its toll —NBM plc

Malawi could be heading  for economic recession with gross domestic product (GDP)  projected to contract by -3.5 percent as the financial toll of the coronavirus continues to escalate.

A recession is a macroeconomic term that refers to a significant decline in general economic activity.

Malawi did not go into full national lockdown for Covid-19, but the local infections and deaths due to the virus pandemic continues to soar.

In its July Monthly Economic Review published on Saturday, National Bank of Malawi (NBM) plc said like many countries across the world, Malawi’s growth prospects are shrouded in uncertainty with the worst-case real GDP to experience a recession.

“Burgeoning public debt and deficit spending coupled with the worst-case recession forecast means that the new administration may not have recourse to a fiscal stimulus package to kick-start the economy. Fiscal consolidation remains the only viable option for the new Minister of Finance,” reads the review in part.

“Options include enhanced domestic and external resource mobilisation and public expenditure efficiency, prioritisation and monitoring not only to right size the civil service but also streamline procurement,” added the  Malawi Stock Exchange-listed bank.

NBM Plc indicates that Malawi economy is expected to rebound in 2021, growing by an estimated 4.5 percent buoyed by the growth in agriculture; wholesale and retail trade; mining and quarrying; electricity, gas and water; information and communication and financial and insurance services.