By Taonga Sabola:
Malawi’s main driver of the economy, agriculture, is expected to rebound to two percent this year, up from 0.6 percent, the first Monetary Policy Report for 2019 has shown.
The rebound in agriculture, coupled with an anticipated 4.9 percent acceleration in the wholesale and retail trade sector as well as other sectors, would propel the economy to 4.1 percent up from the anticipated four percent in 2018.
The report, released on Thursday, says sluggish growth of agriculture output estimated last year contributed to a lower overall economic growth of 4.0 percent, which was 1.2 percentage points below the recorded growth in 2017.
It says, overall, output gap was negative for the last half of 2018 on account of both agriculture and non-agriculture output gaps being negative.
“Uneven distribution of rainfall in 2017/2018 growing season as well as the spread of the fall armyworm yielded negative agriculture output gap whereas the negative non-agriculture output gap is a result of tight monetary conditions and other structural constraints,” reads the Monetary Policy Report in part.
It says GDP growth in 2019 is projected to be better than in 2018 on account of good performance in agriculture, construction, wholesale and retail trade; manufacturing, electricity, gas and water, transportation and storage, information and communication, and financial and insurance services, among others.
“Agriculture output for the year 2019 is expected to recover to 2.0 percent from 0.6 percent in 2018. Wholesale and retail trade sector is estimated to grow by 4.9 percent.
“The dynamics of the economy as measured by contributions of various sectors to GDP have not changed much over the past eight years with the agriculture sector having the largest contribution of about 30 percent to total GDP,” reads the report.
Malawi’s economy has remained agro-based. That is to say, the strength of the economy depends on the vibrancy of the agriculture sector.