World Bank cuts Malawi 2017 GDP growth rate: Projects 4.4 percent
The World Bank has painted a gloomy economic outlook for Malawi by revising downwards the country’s real gross domestic product (GDP) growth rate to 4.4 percent contrary to Reserve Bank of Malawi estimate of 5.6 percent made in January.
World Bank says in its latest biannual publication Malawi Economic Monitor (MEC) that the GDP rate will be driven by improved conditions in the agriculture sector.
The agriculture sector’s contribution to GDP—the monetary value of all finished goods and services within a country’s border in a year— has been marginally shrinking in recent years.
RBM had projected 5.6 percent GDP growth for this year which raised a lot of questions from economists who argue this is another far-fetched dream as not much has changed since 2016.
But World Bank in its fifth edition of MEM titled Harnessing the Urban Economy has cut the rate to 4.4 percent.
The bank also projected that an average inflation rate will decelerate to 15.2 percent in the year with improved agricultural production and reduced pressure on food prices.
“A favorable weather pattern with increased rainfalls in 2017 is expected to result in higher levels of agricultural output than was recorded in 2015 and 2016,” noted the bank in the MEM released on Thursday afternoon and seen by Nyasa Times.
The bank has since noted that Malawi needs to manage its urbanization process for it is critical to the country’s efforts to boost resilience, reduce poverty, and achieve sustainable, inclusive growth.
The World Bank argued that Malawi is still at an early stage of urbanization and the slow urban transformation rate well-positions the country to formulate plans to maximize the benefits of urban agglomeration into the future.
It however cautioned that a more rapid rate of urbanization might result in urbanization of poverty unless more public resources are allocated to meet investment needs in urban areas, and capacities of local governments strengthened to manage increased urbanization rates.
The MEM has since suggested that a systematic effort should be made to improve revenues of city councils from their own sources with emphasis on property tax, and better management of resources and services.
Other recommended measures include modernizing payment systems, reducing leakages, updating regulatory provisions, and outsourcing some services to the private sector.
In its analysis, the MEM acknowledged the efforts government is making in containing public debt, containing spending, improving fiscal management, and implementing reforms in key areas as agricultural markets, all of which are helping to lay the foundations for future growth.
“Government however still needs to be cautious about the macroeconomic environment, continue efforts to consolidate its fiscal position and begin to focus on medium term policies and investments to improve the country’s resilience against climate-related shocks,” said Richard Record, lead author of the MEM.
The MEM is a series of biannual country flagship reports that provide an analysis of economic and structural development issues in Malawi with the aim of fostering better informed policy analysis and debate. Previous MEMs were Emerging Stronger, Absorbing Shocks, Building Resilience., Adjusting in Turbulent Times, and Managing Fiscal Pressures.
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