National Bank forecasts subdued economic growth prospects for Malawi in 2022

By Saidi Winnes

Financial powerhouse National Bank of Malawi plc says it expects continuing pressure on inflation due to global economic trends orchestrated by the imbalance in the demand and supply as well as the prices hike in domestic fuel and maize.

In its summary of unaudited interim results for the six months period ended June 30, 2022 signed by Chairman Jimmy Lipunga the Bank says it expects Malawi’s challenging operating environment to persist.

“Pressure on inflation is expected to continue, largely driven by the continued spill-over effects of the rising international commodity prices, foreign exchange pressures emanating from the imbalance in the demand and supply, as well as effects of increases in domestic fuel and maize,” it says.

But the Bank has assured the public that it remains cautiously optimistic, and it will continue with its strong performance in the second half of the year.

The Group also says that the poor economic outlook for the year 2022 was as a result of domestic economic hiccups followed by the spillover effects of the ongoing Russian-Ukraine war, and the resurgence of new waves of the COVID-19 pandemic.

The statement reads: “The economic growth prospects for 2022 were negatively affected by the effects of weather-related shocks such as the aftereffects of cyclone Ana as well as the delayed and early cessation of rains in most parts of the country. Other factors included the intermittent power supply, spillover effects of the ongoing Russia/Ukraine war, persistent global supply chain disruptions, and the resurgence of new waves of the COVID-19 pandemic.”

“On the foreign exchange front, pressures emanating from demand/supply imbalances persisted despite the devaluation of the Malawi Kwacha by 25%, as the country pursued the securing of an approval for an Economic Credit Facility (ECF) program with the International Monetary Fund (IMF) which is yet to be granted. Overall inflation was on an upward trajectory; the Policy Rate was adjusted upwards by 200 basis points to 14% in May 2022.”

The Bank registered a Group after tax profit of K22.1-billion, representing an increase of 73% from the K12.8-billion profit realized in 2021.

Net Interest Income increased by 48% while other Income increased by 13%, and the Operating Expenses increased by 18% whereas Net Impairment on Loans and Advances decreased by 4% to K4.6-billion.

 Customer deposits and the loan book grew by 34% and 31% respectively, year on year, and the Investment in fixed income securities grew by 48%.

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