The native economic system continues to be weak to myriad shocks with most indicators deteriorating previously yr, a latest report by funding advisory agency, Bridgepath Capital Limited reveals.
In its Market Update for the week ended October 25, the agency says previously yr to September 2024, most key macroeconomic fundamentals remained risky, exerting pressure on the economy.
For occasion, figures within the report present that the native unit, the Kwacha, considerably depreciated throughout the interval below assessment in opposition to main currencies such because the US greenback, transferring from K1,126.50 to K1,750.31. This represents 55.4 % depreciation.
The Kwacha additionally fell by 70 % in opposition to the British pound to commerce at K2,411.29 from K1,412.17. It fell by 65.9 % in opposition to the Euro from K1,225.22 to K2,033.14.
The report additional reveals that headline inflation—the speed at which commodity costs change at a given time in an economic system—elevated by 6.5 proportion factors to 34.3 % in September 2024 from 27.8 % in the identical month final yr.
Food inflation rose from 36.8 % to 43.5 %, whereas non-food inflation rose from 17.2 % to 21.8 %.
Gross Official Reserves additionally declined from $242.68 million in September 2024 to $146.3 million in February 2024.
However, whole reserves, together with personal sector holdings, contracted from $652.14 million to $549.85
million by September 2024.
But the coverage fee was held regular at 24 % for a higher a part of the interval earlier than growing to 26 % in early 2024.
In an interview, Economics Association of Malawi President Bertha Chikadza mentioned the development has an opposed affect on the economic system.
She, nevertheless, painted a constructive outlook.
“The government is also pursuing debt restructuring negotiations which, if successful, may help reduce debt to sustainable levels.
“However, there are significant risks to this outlook. Inflation is expected to remain elevated and this will continue to impact overall macroeconomic stability,” Chikadza mentioned.
But one other economist Velli Nyirongo mentioned the outlook stays combined.
He mentioned with out immediate corrective measures, the economic system dangers extended instability.
“The combination of a weaker currency and high inflation continues to erode real incomes, while elevated interest rates suppress business expansion, curtailing job creation and economic dynamism,” Nyirongo mentioned.
