Country Report Malawi February 2009

Outlook for 2009-10

• The May 2009 elections will be hotly contested by the country’s three main political parties and their presidential candidates, with none expected to secure an outright majority.
• The opposition Malawi Congress Party (MCP) will have an advantage if it can secure an ally in the Northern region, dominate its Central region stronghold and benefit from the Southern region being split between its opponents.
• A new IMF programme is expected to be agreed that will continue to prioritise macroeconomic stability and structural economic reform.
• Donor support is expected to pick up over the forecast period following the passing of the 2009/10 (July-June) budget, although any debacles with future budgets will lead to disbursements being delayed again.
• The global downturn and weak commodity prices will hit the country’s trade and investment inflows, but expansion of uranium production will lift real GDP growth to 8.2% in 2009, although growth will slow to 4.8% in 2010.
• Lower global oil and food prices will see average inflation fall to 8.4% in 2009, outweighing the impact of election-related spending. In 2010 lower government spending will reduce inflation to 7%.
• The current-account deficit is forecast to narrow from 13.3% of GDP in 2008 to 12.7% of GDP in 2009 and 10.5% of GDP in 2010, assisted by the onset of uranium production and the slowing of import growth.

Monthly review

• The ruling Democratic Progressive Party (DPP), at its first national convention, in mid-January, outlined priorities to free Malawi from the poverty trap, including agriculture and food security, and infrastructural development.
• The Malawi Energy Regulatory Authority (MERA) announced that petrol and diesel prices would be reduced by 15%, while paraffin prices would be cut by 20%. The reduction will help to cut inflation.
• In December the inflation rate reached 9.9% year on year, up from 9.6% in November. Average inflation for 2008 increased to 8.7%, from 7.9% in 2007.
• Malawi’s first uranium mine is gearing up to start production. In January Paladin Energy, the Australian company developing the Kayelekera mine in northern Malawi, reconfirmed that production will begin this quarter.
• Although many large mining projects in Africa are being cancelled or suspended, owing to the adverse global economic environment, Paladin has secured another order for uranium from a North American utility company.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;49;10
NAICS Code: 52;22;212