Country Report Malawi October 2009

Outlook for 2010-11

• The Democratic Progressive Party secured a parliamentary majority in the May 2009 elections, which should help to alleviate the political inertia that has crippled policymaking in the National Assembly since 2004.
• International donors are expected to maintain their commitment to Malawi, although this could waver if the country's economic policy were to go off track.
• The fiscal deficit is forecast to narrow slightly from 3% of GDP in 2010 to 2.7% of GDP in 2011, owing to curtailed expenditure and continued revenue growth.
• The Reserve Bank of Malawi (RBM, the central bank) is expected to lower interest rates in late 2009 or early 2010, as inflationary pressures ease further, and will continue on this path in 2011.
• Slower growth in agriculture and a lack of new mining projects will see growth slow from 7.6% in 2009 to 5.3% in 2010 and 5.1% in 2011.
• The kwacha is looking increasingly overvalued and is expected to depreciate from an annual average of MK159.2:US$1 in 2009 to MK195.4:US$1 in 2010 and MK203.6:US$1.
• The current-account deficit is expected to narrow from 7.4% in 2009 to 5.9% in 2010 and 5.6% of GDP, given uranium exports and weaker import growth.

Monthly review

• The Malawi High Court has ruled that the former president, Bakili Muluzi, can extend his stay in the UK for medical treatment and cannot be forced to return to face corruption charges.
• Health officials in Malawi confirmed the first case of swine flu in the country in early September.
• In early September four senior foreign buyers from three tobacco companies were deported, accused of working to keep prices paid below the minimum level set by the government.
• Perks Ligoya has been appointed as the new central bank governor, replacing Victor Mbewe, who resigned in July. Mr Ligoya has previously worked at the RBM and also at the IMF.
• Malawi has fallen one place to 132nd out of 183 countries in the World Bank's Doing Business 2010 publication, as its reforms are taking place more slowly than those of its neighbours.
• Inflation has continued to slow in Malawi, as another bountiful harvest has entered the market. Headline inflation dropped to 7.8% year on year in August, down from 8% in July and 10.1% at the start of the year.

Source: Country Report

This report covers the following industry codes:
SIC Code: 53;37;89;60;49;20
NAICS Code: 44;336;81;52;22;311