Country Report Malawi June 2009

Outlook for 2009-10

• The Democratic Progressive Party (DPP) secured a parliamentary majority in the May 2009 elections, which should help to reduce acrimony in the National Assembly and lower political tensions during 2009-10.
• The president, Bingu wa Mutharika, is well positioned to pursue local elections and a comprehensive reform agenda; the latter will place particular emphasis on expanding electricity generation capacity.
• International donors are expected to maintain their commitment to Malawi, despite continued fall-out from the global financial crisis, although this could waver if the country's economic policy were to go off track.
• The post-election budget of 2009/10 will focus on meeting the government's election pledges, pushing up current spending. The fiscal deficit is forecast to fall from 4.3% of GDP in 2009 to 3.6% of GDP in 2010.
• The global downturn and weak prices will hit the country's trade and investment inflows, but expansion of uranium production will lift real GDP growth to 7.7% in 2009, although growth is expected to slow to 5.3% in 2010.
• The current-account deficit is expected to narrow from 8.5% of GDP in 2008 to 6.8% of GDP in 2009 and 6.3% of GDP in 2010, assisted by the onset of uranium output and weaker import growth.

Monthly review

• Mr Mutharika won re-election with a resounding victory at the May 2009 presidential election, while his party, the Democratic Progressive Party (DPP), secured a large majority at the concurrent parliamentary election.
• The main opposition parties, the Malawi Congress Party (MCP) and the United Democratic Front (UDF) won only 43 seats (22% of the total) between them and will see their influence in parliament greatly curtailed.
• The UDF leader, Bakili Muluzi, was quick to recognise Mr Mutharika as the duly elected president, possibly in an attempt to secure some level of influence in the new administration.
• The MCP leader has refused to accept the election results and has begun a legal challenge against them. This has placed him on a collision course with other senior members of the MCP, who believe that he should accept defeat.
• Tobacco production has increased on the already bumper harvest in 2008 and prices prevailing at auction are now very low, to the concern of farmers and government authorities.

This report covers the following industry codes:
SIC Code: 39
NAICS Code: 31