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Malawi Cuts Growth Forecast Amidst Severe Drought

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Lilongwe: Malawi has revised its economic growth projections downward due to the severe drought that has plagued the region. In a mid-term budget review, Finance Minister Simplex Chithyola Banda announced that the country’s GDP growth for 2024 is now estimated at 1.8%, down from the initial projection of 2.3%. Similarly, the forecast for 2025 has been reduced from 4.3% to 4.0%.

The El Niño-induced drought has had a devastating impact on Malawi’s agriculture-dependent economy, leading to widespread crop failures and food shortages. The government is now grappling with the consequences of this crisis, which has exacerbated existing economic challenges.

On a more positive note, the government has made progress in its debt restructuring efforts. Banda confirmed that agreements have been reached with major bilateral creditors, including China. Discussions with other creditors, such as India, the Kuwait Fund, and the Saudi Fund for Development, are ongoing. The goal is to secure a debt restructuring deal that aligns with the parameters of the International Monetary Fund (IMF) program.

The IMF program, valued at approximately $175 million, was approved last year to address Malawi’s foreign currency shortages and alleviate the resulting economic hardships, including fuel, medicine, and fertilizer shortages. However, the persistent dollar scarcity continues to pose challenges, contributing to high inflation rates that have exceeded 30%.

As Malawi navigates these economic headwinds, the government will need to implement effective strategies to mitigate the impact of the drought, stimulate economic growth, and alleviate the suffering of its citizens

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