According to the bank’s analysis the downward revision reflects the impact of weather shocks on the production of maize and other key crops, uncertainty to the economic outlook and a weak fiscal environment.
“The prevailing weak fiscal environment is being manifested by resurgent rate of inflation, which is hovering around 24 percent, continued high lending rates in the banking sector and a weakening local currency which has largely triggered high commodity prices on the market eating into purchasing power of average Malawians in the process,’ it said.
It added that the agriculture sector is expected to contract by two percent while industry is expected to grow by 4.2 percent and services by 5.1 percent this year.
The analysis said both the weather shocks and macroeconomic imbalances that Malawi is currently experiencing would be causing instability on their own but together the impact is amplified.
However, the revised rate of 2.8 percent is 0.5 percentage points lower than the recently revised rate of 3.3 percent by the International Monetary Fund.