Malawi economy shows encouraging signs

Trade volumes in and out of Malawi are recovering in response to measures introduced by the government under president Joyce Banda. “There are encouraging signs that economic recovery is under way, aided by increased availability of foreign exchange, including the re-establishment of external credit lines,” says Tsidi Tsikata, who led a recent International Monetary Fund (IMF) mission to Malawi. Improved price incentives for tobacco production and good rains so far this season are expected to boost agricultural output and overall growth of the economy in 2013. Transporters and shipping companies may face an imbalance in the flow of cargo. “The devaluation and adoption of a marketdetermined exchange rate regime last May seems to be stimulating the production of exports and import substitutes while restraining demand for imports,” adds Tsikata. Challenges remain within the country, he warns: “There is growing public outcry over falling living standards and perceived wasteful spending and fraudulent activities in the government sector. There have also been strikes by civil servants and other workers demanding higher wages. “Given the government’s limited resources, the mission recommended a tightening of expenditure controls and identification of lower priority activities that can be cut or postponed to make room for higher priorities”.