IMF Predicts 7% Economic Growth for Malawi

IMF Mission Chief for Malawi Pritha Mitra

JOHANNESBURG, MARCH 24, REUTERS: The International Monetary Fund (IMF) said on Tuesday Malawi’s economic growth may rise further to 6-7% in the medium-term and inflation is expected to fall to 9.3% in 2020 from 11.5% in 2019, notwithstanding the effects of coronavirus on its economy.

In a statement at the end of an IMF staff visit, Mission Chief for Malawi Pritha Mitra said economic growth will be supported by “infrastructure that is more resilient to shocks from climate change, improved access to finance, crop diversification, and an improved business climate.”

Inflation will decline as elevated food inflation moderates, gradually converging to 5% over the medium term.

The small southern African nation’s economy is largely reliant on sales of tobacco, tea and sugarcane, with growth having slowed in recent years because of an El Nino-induced drought, electricity shortages and political uncertainty.

Cyclone Idai, the worst cyclone in Africa for decades, lashed Mozambique, Zimbabwe and Malawi a year ago, killing thousands and wrecking infrastructure.

“The authorities regained control over the budget in the first half of FY 2019/20, but maintaining this performance for the second half of the fiscal year will be challenging.

Pressures from COVID-19 and political uncertainties ahead of the new Presidential elections are weighing on revenues,” Mitra said.

“Malawi’s debt has risen but both its external and overall risk of debt distress remains “moderate”.”

In January, Malawi’s central bank said gross domestic product would grow by as much as 6% in 2020 as the country recovered from drought and agricultural output rose.

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