Malawi lifts 2009 growth forecast to 8.7% on crops says RBM Governor

Malawi raised its 2009 economic growth forecast to 8.7 percent on expectations of a bumper corn harvest and on plans to increase investment in roads, schools and hospitals, central bank Governor Victor Mbewe said.

The estimate compared with the 8.4 percent forecast late last year, Mbewe said in an interview in Dar es Salaam, Tanzania where he is attending an International Monetary Fund conference.

The economy probably expanded 7.9 percent last year, he added. Malawi, a southern African country that earns more than half its income from agriculture, went from famine in 2005 to becoming a food exporter after it increased fertilizer subsidies to farmers.

The country will produce more than 3 million metric tons of corn in 2008/09, compared with local consumption needs of 2.2 million tons, Mbewe said.

Lower tobacco prices may undermine economic growth this year, the governor added.

Malawi, a country of about 12 million people, is the world's second-biggest producer of Burley tobacco, which accounts for about 60 percent of the country's foreign-exchange earnings.

The central bank will probably keep its benchmark interest rate at 15 percent for some time to keep inflation in check, Mbewe said.

The inflation rate rose to 10.1 percent in January from 9.9 percent in the previous month, the statistics office said on Feb. 17.

Malawi became the first country to draw funds from the IMF's revised Exogenous Shocks Facility in December, receiving $77.1 million in loans to help offset the impact of rising fuel and fertilizer costs.

Nyasa Times/Bloomberg

Post published in: Agriculture

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