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Submitted by Bernabe Sanchez on
Khwima, Hope you are well. Positives: (1) The tobacco harvest was sold all in advance of the financial crisis and commodity price collapse, generating a record $465 million for 2008. (2) Oil and, very important for Malawi, fertilizer prices have fallen by over two thirds since their peak in mid-2008 (shipping costs have also fallen by 80%). If prices remain at this level Malawi is likely to save over $300 million in its import bill during 2009. (3) Exports: sugar prices have been unaffected by the collapse of commodity prices; more difficult to find info on tobacco and tea, but just as cocoa demand for these could be fairly income inelastic in world markets - cocoa prices are up 70% on the year; a slight negative is that cotton is down 40% from its peak in 2008; uranium prices holding at $53 per lb, so new exports revenue in 2009 of $175m (down significantly from mid-2008 estimates, but still a very significant boost to the economy). So in my view as far as Malawi's prospects for 2009 are concerned there are two issues of far greater importance than the global recession: (1) That a free and fair election takes place. (2) That the kwacha is allowed to depreciate to its real value against the USD - the current level of overvaluation (30%) is unsustainable and damaging to the country.