Economists in Malawi are watching the global financial storm
known as the credit crunch with unease and uncertainty over its possible
effects on the country's economy. Malawi is among the world's poorest nations
and relies on donor aid for more than 40 percent of its national budget. Voice of America English to Africa Service reporter
Lameck Masina, in Blantyre, says that members of both the government and the
private sector are expressing concern about how the country can best respond to
the effect of the global financial chaos.
Thomas Munthali is an economist with the World Bank
in Malawi. He thinks in the short term Malawi may not be affected:
"I think for Malawi [this] may [feel like an] impact
because we are very much [disconnected] from the international financial
system. But if you are looking at where we have recession hitting global
economy, [it's mostly affecting Malawi's] main trading partners. [So] we expect
there to be a reduction in trade and that can affect growth [on the economy] in
the coming year."
Munthali dismisses fears that the downturn in the
international economy will make donors less likely to give aid because of
concern about their own financial health:
"I don't think that there will be a withdrawal
of funding by donors. For example this year donors seem to still be very
committed to financing Malawi and I am sure this should be the case with the
whole of Africa."
But he says once the crisis reaches its peak, donors
may have a change of heart:
"Maybe next year when recession kicks in you could
see the possibility of donors reducing their aid going to Africa because
essentially the commitment depends on how much the [Western] economies have
grown [or contracted]. So when the
economies [show little growth] you expect the aid levels to be less."
Ephraim Munthali is spokesman for the Ministry of
Finance. He told reporters that donors have not yet given any indication that
aid will be reduced as a result of the global situation. He said over the past
four years Malawi has sustained an average growth rate of more than seven
percent. That's above the six percent benchmark
considered necessary to meaningfully reduce poverty.
Statistics indicate that Malawi's GDP growth for 2008
has jumped from 7.4 percent to 8.7 percent. Economists attribute this to robust
performance by the agriculture sector, especially the tobacco industry, which
has registered record high revenue.
But an IMF survey in October projected that growth
rates in sub-Saharan Africa would slow to 6 percent in 2008 and 2009, 5 percent
lower than last year.
It says recent global economic turbulence will probably
lead to a decline in the flow of private capital, remittances, and aid to