Malawi inflation to soar above 7 pct forecast

Malawi's inflation rate in 2008 is likely to be "much higher" than the 7 percent forecast by the government, the African nation's finance minister told Reuters on Friday.

Malawi's economy, which had been enjoying a modest boom, has been buffeted this year by surging food and fuel costs. The country relies on agriculture, primarily tobacco, for its foreign earnings and is dependent on imported oil and gas.

"I think inflation would end up much higher than the seven percent projected because of the prevailing conditions," Finance Minister Goodall Gondwe said in an interview.

Gondwe said that other forecasts would also be affected by the food and energy shocks but did not provide details. Malawi's government has projected that the economy would grow this year by 7 percent, compared to 8 percent last year.

One of the poorest nations in Africa, Malawi has seen its economy expand due to good maize harvests, economic reforms and an increase in aid from Western nations and other international donors.

Inflation dropped into single digits in early 2007 for the first time in four years, fuelled by lower food prices. That prompted the central bank to continue cutting interest rates.