Written by YAMIKANI SIMUTOWE
BLANTYRE--Malawi’s Nico Asset Managers’ forecast has indicated that Malawi’s inflation will continue to rise despite government’s economy recovery plan and measure to cushion the vulnerable from the impact of the reforms.
In its monthly report of September, the institution says the local currency is also expected to continue to weaken following the liberalization of the exchange rate regime. However the report shows that interest rates will stabilize following measures implemented to curb the acute liquidity shortages in the banking system.
“Authorities have reduced their real GDP growth forecast for Malawi to 1.6% on account of significant contractions recorded in major sectors of the economy. In 2013-16 it will recover gradually as the economy stabilizes.
“Inflation is forecast to continue rising in 2012 as the lean season approaches. From 2013 onwards it will moderate as commodity prices stay fairly stable, demand decreases and domestic productivity increases,” reads the September report.
Malawi government developed a recovery plan aimed at achieving quick development results. It outlines policy reforms as well as measures to cushion the vulnerable from the impact of any reforms.
Authorities have reduced their real GDP growth forecast for Malawi to 1.6 percent on account of significant contractions recorded in major sectors of the economy. In 2013-16 it will recover gradually as the economy stabilizes, says the report.
During the month of August 2012, “headline inflation” rose to 25.5 percent from 21.7 percent in July 2012 due to an increase in both the non-food and food component, according to the report. However, the All-type Treasury Bill yield by 0.96 percentage points to 21.34 percent in the just gone month of September from 20.38 percent in August.
In its economic highlights, the Kwacha weakened against all the major currencies during the month under review. As at 30 September 2012, the Kwacha was trading at K298.97 to a $1, represent a 6.4 percent decline, K485.38 against GBP, with a decline of 9.4 percent, K36.32 to ZAR1, representing a 9.5 percent decline and K386.06 to EUR, representing a 9.9 percent decline.
The report also highlights that the global oil prices increased in the month of September 2012 by 1.05 percent to average $110.67 per barrel from $109 per barrel per month with total forex reserves standing at $393 million as at 21 September 2012 (2.09 months worth of import cover) from $405 million (2.15 months worth of import cover) as at 31 August 2012.
NICO Asset Managers Limited is an investment management and advisory firm, which provides investment management services and products to institutional and individual investors including investment management, corporate finance and investment advisory services and it is registered with the Reserve Bank of Malawi as a investment manager and licensed Investment Advisor.