The IMF has revised its growth forecast for Malawi for 2012 to 1.9 percent from 4.3 percent, saying a slowdown in manufacturing and agriculture has hit Malawi
IMF mission chief Tsidi Tsikata, after a two week review in Malawi, said in Lilongwe that the exogenous shocks have created a more challenging environment than expected when the extended credit facility arrangement was done with Malawi.
“Real GDP growth is estimated to have slowed from 4.3 percent in 2011 to 1.9 percent in 2012 mainly due to contraction in output in the agriculture and manufacturing sectors,” Tsikata said during a news conference in Lilongwe.
This is the slowest growth in over a decade for the southern African country which in the last five years have grown at an average of 7 percent buoyed by bumper harvests.
He said that Malawi government currently faces enormous challenges like the continuing depreciation of the exchange rate, rising inflation and unforeseen difficulties in the implementation of of social protection programs.
“The mission discussed the scope of tightening monetary and fiscal policies to stabilize the exchange rate and contain inflation,” he said.
Soaring food prices have in recent months pushed inflation to 28.3 percent far higher than the forecast of around 18 percent for calendar year 2012.
And tobacco earnings have fallen in recent years from US$416 million in 2010, to US$292 million in 2011, and US$177 million this year – a development that puts Malawi needing more donor aid than ever before.