Macroeconomic imbalances, inadequate power and weather-related shocks pose threats to the country’s economic growth, local investment firm Bridgepath Capital Limited has warned.

In its 2022 Annual Economic Report, the firm said growth is at risk of exchange rate depreciation compounded by global inflationary pressure from increasing prices of imports and decreasing export prices on the international market.

Part of the damaged Kapichira Hydro-Power plant

Reads the report in part: “The current increase in domestic food prices together with increasing price of fuel and energy is expected to risk increasing inflation and further depreciation of the domestic currency.

“This is expected to also exert pressure on the fiscal deficit that is already high.”

The firm has also observed that the expected electricity tariff hike in 2023 by the Electricity Supply Corporation of Malawi would have a bearing on the inflation rate.

The firm also notes that while restoration efforts at the Kapichira Hydro Power Plant are underway following extensive damage by Cyclone Ana in January last year, the country continues to face electricity supply deficit resulting in extended periods of power outage.

The investment firm also fears that the country risks lower agricultural yields in the 2022-23 agricultural season due to increasing prices of fertiliser on the global market and challenges faced in the implementation of the Affordable Inputs Programme (AIP).

Reserve Bank of Malawi Governor Wilson Banda is also on record as having said power supply uncertainties and inflation, which is way above the central bank target, remain key factors shaping the economic outlook.

He said: “The protracted power supply disruptions and fuel shortages, in addition to the prevailing high inflation which is constraining consumer demand, may weigh on the growth prospects.”

But Minister of Finance and Economic Affairs Sosten Gwengwe said during his 2023/24 Pre-Budget Consultations in Blantyre last week that the local economy is still recovering from the effects of Covid-19, climate-related shocks and economic effects of the Russia-Ukraine war.

He said Treasury expects the economy to grow by 2.7 percent in 2023.

Meanwhile, the World Bank in Global Economic Prospects report released last week has forecast the local economy to stand at three percent in 2023.

The growth rate is, however, three percent shy of the desired six percent per annum growth that Malawi desperately needs to attain its goal of achieving a lower middle income economy status by 2030.

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