Malawi revises down growth forecast again

The Ministry of Finance has once again revised downwards the 2012 economic growth outlook for the country to 1.4 percent, a few weeks after the Reserve Bank of Malawi (RBM) brought down the growth prospect to 1.6 percent from the earlier official estimate of 4.3 percent.

Meanwhile, the International Monetary Fund (IMF) says it will wait until the end of its review mission by mid this month to determine the new growth rate for Malawi.

In his presentation at the Malawi Inclusive Growth Conference in Lilongwe last weekend, Ministry of Finance’s Acting Director of Economic Affairs Francis Zhuwao put Malawi’s estimated growth figure for 2012 at 1.4 percent, a downshift from the 1.6 percent announced by Reserve Bank of Malawi Governor Charles Chuka earlier last month.

He, among other things, attributed the decline to reduced tobacco production as well as shortages of foreign exchange and fuel and intermittent power supply but said government has already undertaken a number of adjustments to address the challenges.

“The 2012/2013 budget is a recovery budget designed to bring the economic back on track,” said Zhuwao.

Commenting on the revised growth figures, IMF Deputy Director for Africa David Owen said the review mission currently in the country provides an opportunity for the IMF and the government to assess the situation, including the growth outlook.

“We will look at the growth numbers, talk to government and the central bank, get their assessment of the situation. And we have the ability to modify the programme if necessary,” said Owen.

On his part, IMF Mission Chief for Malawi Tsidi Tsikata said apart from the growth rate, the team will also look at other assumption like inflation and the exchange rate that have changed, especially because of the drought, since the IMF programme was approved in July.

“I cannot promise you that we are going to end with 1.6 [percent] or 1.4 [percent]. We are looking at various indicators,” said Tsikata.