The Malawi government has lowered its economic growth forecast for 2025 from 4.0% to 3.2% amid rising inflation and public protests. Street vendors and jobless youths have taken to the streets, expressing dissatisfaction with the government’s management of the economy. Responding to these challenges, officials aim to boost production in key sectors while addressing a projected budget deficit and negotiating debt restructuring with creditors.
On Friday, the Malawi government revised its economic growth projection for 2025 to 3.2%, a decrease from the earlier estimate of 4.0%. This adjustment follows widespread protests in major cities, including the capital, Lilongwe, and the commercial hub of Blantyre, primarily driven by street vendors and unemployed youths. Demonstrators are voicing their frustrations regarding the government’s inability to rein in double-digit inflation, which they assert is threatening their livelihoods.
Finance Minister Simplex Chithyola Banda noted that the country’s economic growth for the previous year was only 1.8%, impacted significantly by a regional drought that adversely affected agriculture, a crucial sector of Malawi’s economy. As inflation reached 28.5% annually in January, largely due to severe shortages in foreign exchange that have limited the import of essential commodities, the situation has escalated.
In response to the economic challenges, Minister Banda expressed the government’s intentions to alleviate foreign exchange constraints by enhancing production levels in key areas such as agriculture, tourism, and mining sectors. He also announced plans to establish a national anti-crime unit aimed at combating the illegal foreign currency exchange market.
The projected budget deficit for the current fiscal year stands at 9.6% of GDP, with next year’s anticipated to be slightly lower at 9.5%. As of September 2024, public debt was reported at approximately 86% of GDP, and the government aims to finalize debt-restructuring negotiations with both bilateral and commercial creditors. Minister Banda commented, “Government in principle has reached agreements with all official bilateral creditors and is still negotiating with commercial creditors to restructure debt.”
In conclusion, Malawi’s government has revised its growth outlook as public discontent rises due to inflation and economic hardships. Protests have highlighted the struggles of vendors and unemployed youth, amplifying grievances over government policies. Efforts to combat these issues through foreign exchange improvement and agricultural enhancement are underway. These economic challenges reveal the delicate balance the government must maintain to foster growth while addressing public unrest.
Original Source: www.straitstimes.com
