Malawi economic growth seen at 7pct

5/24/2008 7:33:00 AM | Reuters South Africa

LILONGWE
(Reuters) - Malawi's economy was expected to expand by 7 percent in the
2008/09 financial year, with inflation easing to 6.5 percent, Finance
Minister Goodall Gondwe said on Friday.

Economic growth measured 8 percent in the 2007/08 financial year, while inflation stood at 8.1 percent year-on-year in April.

Gondwe
said in a budget speech sharply rising global food prices could add to
inflationary pressures, but overall the country should benefit from the
crisis through a forecasted 500,000 tonne maize surplus this season.
'Malawi stands to gain from the global food crisis if it continues
exporting more maize up from last year's,' Gondwe said when he
presented his $1.6 billion budget, aimed at cutting poverty and
boosting food production.

The southern African nation last year
exported 400,000 tonnes of maize to hunger stricken Zimbabwe and
donated 10,000 tonnes to Swaziland.

Gondwe said that Malawi was
expected to harvest 2.9 million tonnes of maize, down from last year's
3.1 million tonnes due to the floods early this year which wiped crops
in the southern part of the country and a four week drought that hit
other maize belts in the country.

The harvest was still more than the national requirement of 2.4 million tonnes.

Gondwe
said about $600 million of the budget finance would come from Malawi's
donors, reflecting a 36 percent increase in aid. 'This increase
demonstrates our continued management of our resources,' he said.
Exports in this financial year would increase to $850 million from $800
million by 2009.

Malawi remains one of the world's poorest
couontries but the government has won praise and billions of dollars in
debt relief for driving reforms that have steered strong economic
growth over the past 3 years.

However, a continued political
feud between the opposition and President Bingu wa Mutharika is
threatening achievements made and may hobble passage of the budget.

Opposition
legislators have threatened to torpedo the budget, although they agreed
on Monday to attend Gondwe speech. 'We decided to go in today. But the
issue of when the debate starts on the budget starts next week? We
don't expect to be part of that discussion,' George Ntafu, United
Democratic Front leader in parliament told Reuters