Malawi Recovery Threatened by Agriculture Slump, IMF SaysFrank Jomo
Malawi’s economic recovery is facing a threat from a drop in tobacco output and corn production with almost 2 million people facing food insecurity, International Monetary Fund Managing Director Christine Lagarde said.
The IMF cut its growth outlook in half for the southern African nation to about 2 percent for 2012, she said in a speech in Lilongwe, the capital, today. Expansion may reach 5.5 percent in 2013, “assuming strong policy commitment and normal weather conditions,” Lagarde said.
Malawi, the world’s largest grower of burley tobacco, devalued its currency last year, removed restrictions on foreign-exchange transactions and raised gasoline prices, which helped get “the economic wheels spinning again,” Lagarde said.
“But progress is threatened anew by a slump in agriculture,” she said. Prolonged dry spells “ravaged” the country’s harvest in 2012, with some areas experiencing a third straight year of drought, according to the United Nations World Food Programme.
The kwacha was Africa’s worst-performing unit in 2012, falling 51 percent against the dollar. Inflation surged to 33 percent in November from 30.6 percent in the previous month. The Consumers Association of Malawi has called for mass protests against rising costs on Jan. 17.
Malawi ranks as the world’s eighth-poorest nation, according to per-capita gross domestic product data compiled by the International Monetary Fund. Half of the population live on less than $1 a day, with agriculture accounting for 30 percent of the country’s gross domestic product, Lagarde said.