The Reserve Bank of Malawi (RBM) says Malawi’s economy demonstrated remarkable resilience throughout 2019 despite political uncertainty during the year.
The central bank’s governor Dalitso Kabambe said this when commenting on the effects of last year’s political instability on the economy.
According to Kabambe, 2019 was the second year – the first was 2009 – since Malawi became a multi-party democracy that the country went and came out of the polls with a stable economy.
He said Malawi’s economy rebounded from 4 percent growth in 2018 to 5 percent in 2019, higher than the regional average of 3.4 percent and global growth of 3 percent.
“The rebound was explained in part by the recovery of agriculture and a generally stable macroeconomic environment. Inflation remained muted in single digit throughout the year except for November and is projected to average 9.2 percent for 2019.
“Notably, non-food inflation recorded its historically low level of 4.3 percent in October 2019, a feat last achieved in 1981,” said Kabambe.
On other achievements in 2019, Kabambe mentioned the exchange rate which remained broadly stable despite a blip of June and July as well as the single digit inflation that prevailed throughout the year except in November.
He also mentioned monetary policy which went down to 13.5 percent from 16 percent and interest rates for Microfinance institutions which came down to their lowest levels in decades to no more than 6 percent per month down from 30 percent for some products.
According to Kabambe, this interest rate led to growth in micro and small scale loans from K32 billion at the beginning of the year to K49 billion by November 2019.
“Together with Treasury we managed to successfully see through the second and third reviews of the Extended Credit Facility Program with the IMF (International Monetary Fund). Ultimately, it is expected that these improvements will support further growth of the macro-economy in the medium to long term,” he said.
On the political climate, Kabambe noted that Malawi has experienced different facets of its democracy since 1994 and the experiences in 2019 in Malawi were not much different from peers in the region and beyond.
He expressed confidence that investors will still be attracted to Malawi because the country has always been known for its peace and has always been ranked highly by many international and independent institutions of repute.
He said: “I am sure experiences in some months of 2019 alone would not dislodge us from our respected position. And the good thing is that this time around we have remarkably improved our macro economy and maintained a program with the IMF even in a year of general elections. This should be attractive to foreign investors.”