Malawi’s economic growth rate is expected to decelerate to 1.7 percent in 2022 on the back of headwinds triggered by the Russia-Ukraine war, climate change and foreign currency shortages, the central bank said Friday.
The Reserve Bank of Malawi (RBM) governor Wilson Banda said “after showing signs of a promising recovery, the domestic economy is experiencing a downturn.”
“On a preliminary basis, economic growth is expected to decelerate to 1.7 percent in 2022 from an estimated growth of 3.9 percent in 2021, reflecting the impact of the erratic rains experienced in some parts of the country; tropical storms Ana and Gombe which hit the country in January 2022; low supply of foreign exchange; and the impact of the Russia-Ukraine war have all resulted in lower-than-anticipated sectoral production,” Banda said.
The initial growth estimate announced by the government at the beginning of the year was four percent.
The economy has been hit by two devastating tropical storms since the beginning of the year – Tropical Storm Ana and Tropical Storm Gombe. These have affected crop production and crippled power generation.
It has also felt the effects of the Russia-Ukraine war which has driven up fuel and food prices across the globe.
“The domestic economy has been hit hard by the escalation of the geopolitical tension between Russia and Ukraine, as both fertilizers and oil are Malawi’s strategic imports,” Banda said.
The high global prices of these commodities contributed to a US$191 million increase of imports to US$762.2 million during second quarter of 2022, according to Banda.
This was against a backdrop of a US$14.3 million decrease in exports proceeds to US$168.7 million.
This saw the merchandise trade balance worsening to minus US$593.5 million during the second quarter from minus US$456.6 million the previous three months.
Inflation averaged 19.4 percent during the second quarter, up from 13.1 percent in the previous three months.
JN/APA