BLANTYRE-(MaraviPost)-The Reserve Bank of Malawi (RBM) has projected about 5-6 percentage economic growth in year 2020 compared to 5 percentage growth in 2019 and 4 percentage in 2018.

The development has come as a result of projected average of 8.8% inflation rate in 2020 compared to 9.4 percentage inflation rate that was realized in 2019.

The annual headline inflation of 9.4 percent was slightly higher compared to 2018 average record of 9.2 percent ensued by rising food prices.

In the Monetary Policy Statement, Inflation rate has been projected to average 8.8 percent in 2020 with favorable weather conditions and continued exchange rate stability.

Policy rate will also be maintained at 13.5 percentage with liquidity reserve requirements on domestic currency deposits at 5 percentage and at 3.75 percentage on foreign currency.

RBM Governor Dr. Dalitso Kabambe told the news conference in Blantyre on Thursday, January 30, 2020 that Malawi economy did very well in year 2019 with 5.0% growth up from 4.0% which was observed in 2018.

This was despite having major setbacks such as cyclone Idai and general election.

Stable exchange rate was also observed in year 2019 with Kwacha trading at MK738.8731 per US dollar which is equally expected to continue in year 2020.

“Non-food inflation remarkably declined averaging by 3.6 percent from year 2018 to year 2019. With stable exchange rate and global market prices projected to go down, the non-food inflation will remain anchored in 2020 around 4 percentage.

“In terms of food inflation in year 2020 with good weather and expected favourable agriculture output, it is expected to be slowed down but although the main focus at the moment is the non-food inflation that is within our control,” Kabambe said.

According to the Monetary Policy statement, the private sector credit grew by 21.3 percent in 2019 compared to 11.5 percent in 2018 which was supported by reduction in interest rates.

In addition, oil prices are projected to remain stable with Brent crude oil prices projected to average US$58 per barrel in 202 lower than US$60.2 per barrel registered in 2019.

These prices are expected to go down in 2021 to US$55.3 per barrel despite uprising geopolitical tensions.

Kabambe said Malawi has seen stable macro economic stability for the last three years and for this to continue there’s a need to invest in sectors that matter such as energy, Mining, tourism, manufacturing and most important agriculture sector to increase economy growth at an increasing rate.

Kabambe added that there is also a need to invest in education sector for Malawi realize this projected growth so that there can be enough skilled labor to help the other sectors.

Meanwhile, RBM has adopted a symmetric band of 2.0 percentage points around the target of 5.0 percentage in projecting the inflation rate which is in line with international best practice as used by most central banks around the world.