Publication: Malawi Economic Monitor, July 2020: From Crisis Response to a Strong Recovery
Loading...
Files in English
1,451 downloads
Published
2020-07
ISSN
Date
2020-07-28
Author(s)
Editor(s)
Abstract
Malawi’s new Government has inherited a difficult situation: the global COVID-19 pandemic has interrupted the country’s trajectory for a third straight year of faster growth, and tackling its impacts will present a considerable challenge. Growth improved to an estimated 4.4 percent in 2019, up from 3.5 percent in 2018, reflecting a rebound in agriculture. Improved agricultural production supported stronger performance in the industrial and service sectors. The uptick in growth also indicated resilience in Malawi’s economy in light of the impact of Cyclone Idai and considerable political uncertainty. The economy was on a trajectory for its third consecutive year of faster growth in 2020 before the onset of the COVID-19 pandemic. The full extent of the epidemic’s negative impact is uncertain as the crisis is still unfolding, but a host of external and internal factors are dampening the Malawi economy. Global factors include both supply and demand channels. Disrupted supply chains have reduced imports of key production inputs, particularly from South Africa and China. However, exports from both countries have partially rebounded after their strict containment measures have been reduced earlier in the pandemic. Preliminary data indicates that imports were 26 percent lower in April and May 2020 compared to the same time last year. Increased trade logistics costs and delays are also affecting the flow of goods through borders. On the demand side, decreased demand from key trade partners is weighing on exports. The tobacco auction season through early July has seen a decrease in sales, with a 11.9 percent reduction in sales values, due to a 14.7 percent reduction in volumes partially offset by a 3.2 percent increase in average price. Tourism has already been severely affected. Remittances (through money transfer) decreased by 57 percent y-o-y in April before rebounding in May, when they were still 15 percent lower than the year prior.
Link to Data Set
Citation
“World Bank. 2020. Malawi Economic Monitor, July 2020: From Crisis Response to a Strong Recovery. © World Bank. http://hdl.handle.net/10986/34220 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Indonesia Economic Prospects, July 2020(World Bank, Washington, DC, 2020-07)The COVID-19 (coronavirus) pandemic and associated containment measures triggered the deepest global recession in eight decades. As many countries implemented lockdowns and travel restrictions, global demand for goods and services plummeted along with tourism flows and commodity prices; supply chains were disrupted; and financial market volatility spiked. The Government of Indonesia also implemented mobility restrictions from mid-March and then a partial lockdown from April to June, preventing many firms and shops from operating, and discouraging many consumers from shopping. Hit by severe external and domestic shocks, economic activity tumbled. Real GDP growth slumped from 5.0 percent yoy in Q4 2019 to 3.0 percent in Q1 2020, the lowest quarterly growth since 2001. Private consumption slowed as mobility restrictions and personal avoidance behavior curbed household consumption. Investment growth also declined with heightened uncertainty and lower commodity prices. There was broad-based slowdown across sectors. Manufacturing, construction and low value-added service sectors including transport, storage, hotels and restaurants, sectors that employ a larger number of workers, all saw a near halving in their sectoral growth rates from Q4 2019. In contrast, growth of modern, knowledge-intensive services sectors, including digital, financial, education and health services accelerated. The slowdown in domestic demand and the unexpected growth in some manufactured exports helped narrow the current account deficit (CAD) to 2.5 percent of GDP in Q1 2020 from 2.7 percent of GDP in Q4 2019. The goods trade surplus soared, as some diversion of manufacturing production from China and higher palm oil prices earlier in the year propped up export values, while imports contracted due to lower consumption and, investment and falling oil prices. With the sudden stop in global travel and transport, both services exports and imports plunged.Publication Uganda Economic Update, 16th Edition, December 2020(World Bank, Washington, DC, 2020-12)Uganda’s real GDP grew at 2.9 percent in FY20, less than half the 6.8 percent recorded in FY19, due to the effects of the COVID-19 (coronavirus) crisis, and is expected to grow at a similar level in FY21, but downside risks are high. Economic activity stalled during the latter part of the fiscal year due to a domestic lockdown that lasted over four months, border closures for everything but essential cargo, and the spillover effects of disruption in global demand and global supply chains due to the COVID-19 pandemic. This resulted in a sharp contraction in public investment and deceleration in private consumption, which hit the industrial and service sectors hard, particularly the informal service sector. On a calendar year basis, real GDP growth is expected to contract by up to 1 percent in 2020, compared to 7.5 percent growth in 2019, and, as a result, real per capita GDP growth is expected to contract by about 4.5 percent. Even if GDP growth rebounds strongly by 2022, the level of per capita GDP is likely to remain well below its pre-COVID trajectory. As a result of these impacts, the COVID-19 crisis is threatening to reverse some of the gains made on structural transformation and the declining poverty trend of the past decade. This transformation was characterized by a reduction in the workforce employed in on-farm agriculture and a take-off in industrial production, largely in agro-processing. However, following the COVID shock, there have already been widespread firm closures, permanent layoffs in industry and services, a rapid slowdown of activity particularly in the urban informal sector, and a movement of labor back to farming. At the same time, household incomes have fallen, which is concerning given the high levels of vulnerability to poverty, limited social safety nets, and impacts this might have on human capital development and Uganda’s capacity to benefit from its demographic transition.Publication Malawi Economic Monitor, December 2020(World Bank, Lilongwe, 2020-12-14)The pandemic has induced a sharp recession in many countries across the globe. The COVID-19 (coronavirus) pandemic has caused an unprecedented shock to the global economy and led to an expected overall contraction of 4.4 percent in 2020. Advanced economies are projected to shrink by 5.8 percent and emerging and developing economies by 3.3 percent. With large uncertainty about wide and affordable access to vaccines, the outlook for 2021 is for a modest recovery of 5.2 percent. Malawi’s economy has been heavily affected, with growth projected at 1.0 percent in 2020, down from earlier projections of 4.8 percent. With population growth around 3.0 percent, this represents a 2.0 percent contraction in per capita GDP. Political stability has returned following the June 2020 Presidential elections, which should support investment. However, global and domestic factors emanating from the pandemic are affecting Malawi’s economy, including: 1) disruption in global value chains and trade and logistics; 2) decrease in tourism; and 3) decrease in remittances. This has combined with social distancing policies and behavior to also reduce domestic demand. Lower international oil prices, on the other hand, have helped reduce the import bill and alleviated fuel and transportation price pressures. Services and industry sectors have been particularly hard hit, leading to a heavier impact in urban areas. The travel and accommodation, tourism, and transport sectors have been substantially affected. Wholesale and retail trade, as well as manufacturing and construction activity declined due to disruptions in sourcing materials and subdued demand. However, favorable weather conditions supported a strongagricultural harvest, particularly for maize, which is supporting growth and food security. Yet, production of key export crops, particularly tobacco, have declined. Poverty reduction in Malawi has stagnated in the last 15 years and is expected to worsen with the pandemic. An estimated 12 percent of the economically active population have experienced job losses due to the crisis. Although this labor market impact is moderate compared to some other countries in the region, this comes after more than 15 years of Malawi’s poverty rate stagnating at high levels. Poverty has declined more slowly in Malawi than the rest of Sub-Saharan Africa. Malawi’s poverty rate based on the 1.90 US Dollars threshold has declined by 3 percentage points from 2004 to 2016, from 73.4 to 70.3 percent. This compares to an 11 percentage point drop for Sub-Saharan Africa, from 53.2 to 42.3 percent. The current account deficit is projected to expand to 19.6 percent of GDP in 2020, up from 17.8 percent in 2019. Exports and imports have been affected by transport disruptions and lockdowns in major trading partners, as well as lower international oil prices. Despite the decline in imports, the drop in key exports, particularly tobacco, is expected to be even greater. Moreover, the downturn in the global economy has also reduced the inflow of remittances by 30 percent for the year through October compared to last year.Publication Lebanon Economic Monitor, Fall 2020(World Bank, Washington, DC, 2020-11-30)The Lebanon Economic Monitor provides an update on key economic developments and policies over the past six months. It also presents findings from recent World Bank work on Lebanon. It places them in a longer-term and global context and assesses the implications of these developments and other changes in policy on the outlook for Lebanon. Its coverage ranges from the macro-economy to financial markets to indicators of human welfare and development.Publication China Economic Update, July 2020(World Bank, Washington, DC, 2020-07)Economic conditions in China have changed dramatically over the past six months. The COVID-19 pandemic and measures taken to contain it have triggered a combined demand and supply shock. The report projects that economic growth in China will slow sharply to 1.6 percent this year–marking the slowest expansion since 1976–before rebounding to 7.9 percent in 2021. Even as economic activity rebounds, the pace of China’s poverty reduction is expected to slow, reflecting slower growth in household incomes. Without additional policy measures, 8-20 million fewer people are projected to escape poverty in 2020, compared to pre-pandemic projections. While risks to China’s economic outlook are exceptionally high, they can be partially mitigated by a forward-looking recovery strategy supported by good policies. The recovery offers an opportunity to accelerate China’s progress in rebalancing its economy toward more inclusive, sustainable, and greener growth.
Users also downloaded
Showing related downloaded files
Publication Doing Business 2014 : Understanding Regulations for Small and Medium-Size Enterprises(Washington, DC: World Bank Group, 2013-10-28)Eleventh in a series of annual reports comparing business regulation in 185 economies, Doing Business 2014 measures regulations affecting 11 areas of everyday business activity: Starting a business, Dealing with construction permits, Getting electricity, Registering property, Getting credit, Protecting investors, Paying taxes, Trading across borders, Enforcing contracts, Closing a business, Employing workers. The report updates all indicators as of June 1, 2013, ranks economies on their overall “ease of doing business”, and analyzes reforms to business regulation – identifying which economies are strengthening their business environment the most. The Doing Business reports illustrate how reforms in business regulations are being used to analyze economic outcomes for domestic entrepreneurs and for the wider economy. Doing Business is a flagship product by the World Bank and IFC that garners worldwide attention on regulatory barriers to entrepreneurship. More than 60 economies use the Doing Business indicators to shape reform agendas and monitor improvements on the ground. In addition, the Doing Business data has generated over 870 articles in peer-reviewed academic journals since its inception.Publication World Development Report 2011(World Bank, 2011)The 2011 World development report looks across disciplines and experiences drawn from around the world to offer some ideas and practical recommendations on how to move beyond conflict and fragility and secure development. The key messages are important for all countries-low, middle, and high income-as well as for regional and global institutions: first, institutional legitimacy is the key to stability. When state institutions do not adequately protect citizens, guard against corruption, or provide access to justice; when markets do not provide job opportunities; or when communities have lost social cohesion-the likelihood of violent conflict increases. Second, investing in citizen security, justice, and jobs is essential to reducing violence. But there are major structural gaps in our collective capabilities to support these areas. Third, confronting this challenge effectively means that institutions need to change. International agencies and partners from other countries must adapt procedures so they can respond with agility and speed, a longer-term perspective, and greater staying power. Fourth, need to adopt a layered approach. Some problems can be addressed at the country level, but others need to be addressed at a regional level, such as developing markets that integrate insecure areas and pooling resources for building capacity Fifth, in adopting these approaches, need to be aware that the global landscape is changing. Regional institutions and middle income countries are playing a larger role. This means should pay more attention to south-south and south-north exchanges, and to the recent transition experiences of middle income countries.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.