Our economy is suffering from several vulnerabilities- Chakwera

The State President Dr Lazarus McCarthy Chakwera has admitted that the Malawi’s economy is suffering from vulnerabilities citing the downfall of economy of the countries that Malawi depends on.

Making his State Of The Nation Address [SONA] under the theme “delivering economic transformation and governance reform through sacrificial action and service excellence” on Friday during the opening of the 50th session of Parliament, Chakwera said the inflation rate is not encouraging.

He said the Malawi’s economy is same as in our countries as they are still facing the impacts of COVID-19 pandemic, Ukraine-Russia War or government imposed tight monetary policies.

“Even in our neighbourhood, the global economy slow down has spread to our neighbouring countries as the growth of the Tanzania and Zambia’s economy slowed down from 4.9 per cent and 4.6 per cent 2021 to 4.5 and 2.9% in 2022 respectively, ” said Chakwera while the opposition Member of Parliament were booing him.

Continuing with his Address, Chakwera said the economies are expected to register a growth decline from 2.7 per cent to 1.2 per cent.

“Admittedly, the bad news is evident to all Malawians on the economic front,” said Chakwera. “The bad news is that our microeconomics indicators signal that our economy is suffering from several vulnerabilities. While the GDP growth in 2021 was 4.6 per cent, the rebound of 0.8 per cent registered in the year I took office. Bad rebound was 1.2 per cent in 2022 and it is not expected to recover beyond 2.7 per cent in 2023. Even the inflation rate is not encouraging. The average Annual Inflation rate for 2021 was in a single digit at 9.1 per cent and yet this increased by more than double to 20.9 per cent in 2022 whereabout the central banks target the 5 per cent with no prospect of reaching that target in 2023 whose inflation rate is projected to be 18.2per cent,” said Chakwera.

He further said the growth of the global economy slow down from 6 per cent in 2021 to 3.4 per cent in 2022 and it is projected to slow down further even to 2.9 per cent this year.

“The fact is our economy is heavily dependent on strategic foreign imports like fuel, fertilizer, pharmaceuticals and other commodities from countries whose economy has been several disrupted by war, or covid related lock-downs or government imposed tight monetary policies, It is simply unrealistic to not expect any adverse effects on our own economy. The blows from the global economy added on the local exogenous shocks within our context like pressure from servicing our mountain of debt and adverse weather conditions,’ said Chakwera.

As power generation reduction is one of the internal factor that has affected the economic growth, Chakwera said one of its consequence is that industries have resorted to using over-priced diesel to run their factories hence causing the fuel shortage crisis.

The reduction in trade balance that was caused by scarce of foreign exchange was also spotted as one of the factors that has affected the economic growth of the country.

“Our structural challenges in generating foreign exchange have impeded the importation of commodities critical to our economy, such as the importation of pharmaceuticals [which fell by 18% in 2022 ] and the importation of fertiliser and diesel [which both fell with over 30% in 2022] resulting in supply shortages that has caused great pains to Malawians,” he further said.

Chakwera said his government is implementing several measures to ensure that the economy of the country recovers.