Malawi: IMF downgrades growth forecast for 2019

The International Monetary Fund (IMF) is now forecasting an economic growth rate of around 4.5 percent in 2019 in Malawi, six months after announcing a 5 percent forecast for the southeastern African country.

« Malawi’s recent economic performance has been favorable despite the impact of Hurricane Idai. Economic growth is expected to increase to around 4.5 percent in 2019, thanks to the recovery in agriculture in most of the country and the reconstruction of the infrastructure damaged by the hurricane in the south of the country, « said a statement. published on 17 September 2019 by the institution. In the medium term, the fund continues, growth could still reach 6 to 7% « thanks to better access to financing, crop diversification, improved business climate and more resilient infrastructure, including better electricity production « .

Last March, the IMF forecast economic growth of about 5% in 2019 driven by a rebound in agriculture and improved electricity production. Shortly before, local authorities announced that they expect economic growth of at least 7% in 2019, in particular because of the stability of macroeconomic fundamentals in 2018.

« We have started well what we have done so far, stabilizing the economy. This means that debt does not accumulate as before between 2014 and 2015, which means that we can now start growth. I think we will soon catch up to seven or eight per cent growth, « Finance Minister Goodall Edward Gondwe said on January 3, 2019.

With a GDP growth rate of 2.7%, 2016 was a particularly difficult year for Malawi due to the drought. The economy recovered in 2017, with a growth rate of 4.5% and a growth projection of 5% for 2018.

« In the future, it will be important to maintain macroeconomic stability while strengthening resilient growth and reducing poverty. To this end, fiscal policy should aim at preserving debt sustainability while creating space for essential spending for growth, including post-cyclone rehabilitation and reconstruction, « the IMF recommends.

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