Linking Synergies for Common Economic Growth Agenda
Economic growth is crucial for reducing unemployment, broadening tax base, and improving living standards in Malawi. Explore different economic growth approaches and challenges faced in achieving sustainable growth. Learn about the trends in growth volatility and the stagnation of Malawi's per capita income compared to other countries.
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Presentation Transcript
Towards Towards a common economic growth agenda: linking the a common economic growth agenda: linking the synergies synergies Presented at the 2019 Institute of Chartered Accountants in Malawi Annual Presented at the 2019 Institute of Chartered Accountants in Malawi Annual Lake Conference, Mangochi, 19 Lake Conference, Mangochi, 19th th 21 21st stSeptember September 2019 2019 Betchani H. M. Tchereni (PhD) Executive Dean: School of Economic and Management Sciences Malawi University of Business and Applied Sciences
The whys of Economic Growth Reducing unemployment Broadening the tax base Improving the debt to GDP ratio Ultimately improving living standars by reducing poverty levels Social ills such as teenage pregnancies, divorce rates (problem??), suicides etc also tend to be lower in higher income environments
Approaches Classicals Keynesians Monetarists Structuralists
Trend wise, growth has generally been on a downward trend , and the next slide Programme Director is coming directly from the Reserve Bank governor ., I am grateful to this analysis more so that it is coming from the central bank itself .
Growth highly volatile with 7 years of Recessions and 3 years of peaks All recessions explained by weather and peaks by rebounds All recessions explained by weather and peaks by rebounds 20 16.2% 1971 16.7% 1995 13.6% 1965 15 6.6% 4.0% 2.1% 3.1% 5.8% 5.8% 5.5% 10 5 0 1978 1992 2006 1966 1968 1970 1972 1974 1976 1980 1982 1984 1986 1988 1990 1994 1996 1998 2000 2002 2004 2008 2010 2012 2014 2016 2018 2020 -5 Drought - 1.9%, 1968 -10 Drought - 5.3%, 1981 Floods then drought Severe Drought -7.3% 1992 -10.2 1994 -15 SevereDrought -5.0%, 2001 Less volatility since 2004 and the period is associated with good market based macroeconomic stability and sustainable debt thresholds Throughout 55 yrs of independence, output has generally been trending downward sloping dragged down by weather as intensity and frequency is weighing heavily on the economy There is need for a renewed norm-upward trending 6
Malawis per capita income has stagnated compared to other countries GDP Per Capita (USD) GDP Per Capita (USD) 14000 70000 60000 12000 50000 10000 40000 8000 30000 6000 20000 4000 10000 2000 0 1996 1980 1984 1988 1992 2000 2004 2008 2012 2016 0 1998 1980 1983 1986 1989 1992 1995 2001 2004 2007 2010 2013 2016 2019 USA China Malawi UK South Korea Malawi Mauritius Rwanda Kenya Ethiopia In 1964, a South Korean was 5 times richer than a Malawian! In 2018, a South Korean is 60 times richer than a Malawian! In 1964, an American was 82 times richer than a Malawian while in 2018 he is 121 times richer! 7
Structure of the economy: Agriculture drives growth Implications Volatility in GDP growth due to vulnerable to adverse weather Large Wholesale and retail contributing to pressure on the exchange rate Manufacturing is distant third Services: Tourism, entertainment, administrative, accommodation and food services 30.0 27.3 25.0 20.0 15.9 15.0 9.4 9.1 10.0 7.7 5.4 4.6 5.0 2.9 2.8 2.8 2.8 2.1 1.2 0.8 - 8
Agriculture being the main contributor. Carefully used . Old adage defining madness ., may be it can be applied collectively here .?
Which sector is the finance industry financing? Is it that the finances are used the wrong way? One explanation is that banks are profiteering on consumption lending mainly from imported goods and services.
Freedom to kill the economy.? In countries where people are serious with economic growth, behaviours like the ones we saw the past few weeks can even be classified as treasonous, or murder .. When there is no growth today, may be no job to someone in grade 1 in primary school now , myopic actions behind the so called rule of law must not be tolerated .
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