BLANTYRE (Reuters) - Malawi's finance minister said on Tuesday economic growth should pass the eight percent mark this year after good rains raised the prospect of better crop harvests in a country heavily dependent on agriculture.
Goodall Gondwe also told Reuters the annual inflation rate was expected to drop to 10.4 percent in 2006 from over 15 percent last year. He made his brief comments ahead of the unveiling of the 2006/07 budget in parliament next week.
"In 2006, real GDP (Gross Domestic Product) is expected to grow by 8.4 percent on account of the anticipated bumper harvest due to good rains and the successful fertilizer and maize subsidy introduced last year," Gondwe told Reuters.
Growth last year was a sluggish 2.1 percent in the southern African nation of around 12.5 million which is one of the poorest countries in the world. It was hard hit by a scorching drought that left around 5 million in need of food aid.
According to the World Bank, agriculture accounts for 45 percent of Malawi's GDP, so any improvement on that score is bound to translate into faster growth.
The annual inflation rate was 16.1 percent in April and is seen falling because of increased supplies of staple foods such as maize.
Gondwe said his budget also aims to reduce expenditure to 28.7 percent of GDP in 2006/07 from 32.2 percent in 2005/06.
The budget is seen as key to increasing donor confidence as the country attempts to qualify for badly needed debt relief.
But it faces big political hurdles after threats from the opposition to torpedo it over a number of political disputes with President Bingu wa Mutharika. The opposition has a majority and so there is no guarantee that the budget will be passed.