2020 was challenging for Malawi as the pandemic had a severe impact on its projected growth rate. Initially expected to grow by around 4.8%, it managed just 1.0% instead. Overall, considering the population growth, the GDP per capita increased by around 2% meaning Malawians had less income during the year. That said, the country is experiencing a time of relative political stability following the June elections.
However, problems with global supply chains, reduced numbers in the tourism sector, a lower level of remittances to the country, and less demand in local consumption will keep recovery at a slower rate. Furthermore, some 12% of those working before the pandemic are believed to have lost their job; but this is less than some regional neighbors.
How did this impact trading?
Malawi has its own stock exchange as of 1994. It started small but then started listing and trading equities in 1996. During the pandemic, some of the companies on there had an uphill struggle ahead of them. Those in tourism including hotels and resorts found it difficult to remain profitable, while those in manufacturing struggled as well. In finance, it was those that embraced technology who weathered the storm well. Some even went on to start 2021 with record highs. Mobile telephony, telecoms, and other forms of technology also managed to perform well despite the overall constricting of the economy.
The volatility of equities during the last year presented a range of opportunities for investors. Those interested in trading CFD stock shares could speculate on the increase or decrease in value of certain shares, rather than having to buy the underlying asset. In a time where purchasing the underlying asset was possibly riskier than ever, this form of trading was popular with many.
What does the future hold?
The future of Malawi’s economy will depend a lot on how the country and the rest of the world, recover from the pandemic. It’s hoped that vaccination program rollouts will positively impact tourism levels and increase demand for consumables.
Analysts have predicted that 2021 will continue to be a tough year as we see further fallout from the pandemic. The public deficit will reach around 13% by the end of 2022, and public debt will almost surpass 80%. There will likely be an increase in inflation during this year, but it should get back to around 7.7% by 2022. The economy will be boosted by aid, grants, and hopefully an uptick in tourism as other countries start allowing international travel again.
There are plenty of opportunities to be had when trading contracts for difference. Purchasing shares and trading them may be a bit more difficult during these times, so CFD is a viable option. Of course, with such uncertainty in the future and no such thing as guarantees in trading, you must always be careful when planning and executing your strategy. Keep your eye on all economic factors as well as political, social, and business news to help you make the most informed choices.