World Bank Suggests Priority Areas for the Short Term
LILONGWE, June 25, 2019 — Malawi has an opportunity to set itself on a path of prosperity if it prioritizes the implementation of policies that create productive jobs and deliver quality basic services for the growing population, says a new edition of the World Bank Malawi Economic Monitor (MEM).
The 9th edition of the MEM, Charting A New Course, observes that Malawi will need decisive leadership and bold policies to build on past progress, and ensure the effective use of limited fiscal resources on areas that have the most impact on growth, job creation and poverty reduction. Developing the education, skills and health of Malawians will also be pivotal for the transformation of the economy.
The MEM therefore lays out four interrelated policy directions that the World Bank encourages the country to focus on in the short to medium term:
(i) building strong economic and institutional foundations, with supportive macroeconomic policies and effective public service delivery;
(ii) unlocking the potential of the private sector to create productive jobs with higher income levels and ensure food security;
(iii) investing in human capital by improving education and reducing the fertility rate and stunting; and
(iv) invest in resilience and develop better systems for managing shocks.
“Malawi can chart a new course towards a future where the population has higher incomes and opportunities. With a young population, Malawi needs to focus on ensuring that young people can make productive and worthwhile contributions to the economy,” said Greg Toulmin, Country Manager for Malawi. “Authorities therefore need to take bold actions to implement actions that address factors that have historically derailed progress, such as corruption, expenditure overruns, unattractive business environment, inefficient energy and water services, high fertility rates, and vulnerability to weather and climate shocks.”
In monitoring recent economic developments, the MEM notes that although Malawi was hit by Cyclone Idai in March 2019, real Gross Domestic Product (GDP) growth is projected to reach 4.5 percent in 2019 buoyed by resilient agriculture. Inflation remains in single digits largely aided by a steady decline in non-food inflation. The FY2018/19 fiscal deficit is expected to stand at 5.8 percent of GDP, lower than the previous year but higher than budgeted. This will mostly be financed by domestic debt which is already high.
The MEM primarily provides an analysis of economic and structural development issues in the country. This 9th edition was led by Priscilla Kandoole, Malawi’s Country Economist. Previous MEM editions published since 2015 are: Investing in Girls’ Education, Realizing Safety Nets’ Potential. Land for Inclusive Development, Harnessing the Urban Economy, Emerging Stronger, Absorbing Shocks, Building Resilience., Adjusting in Turbulent Times, and Managing Fiscal Pressures.