Malawi growth seen slower at 7.9

Malawi's economic growth is expected to slow to 7.9 percent in real terms in 2009, while inflation should average 9.7 percent, Finance Minister Ken Kandodo said on Friday.

Malawi has said it has not been overly affected by a global slowdown, but that the downturn could still hit tobacco and other key exports in the medium term.

"Malawi's economy is projected to grow in real terms by 7.9 percent. The forecast is underpinned by expectations of strong agriculture production, (the) imminent start of uranium production at Kayelekera and continued growth in service sectors such as telecommunications," Kandodo said in a budget statement.

Paladin (Africa) Ltd, a subsidiary of Australian uranium miner Paladin Energy Ltd, started production at its $200 million Kayelekera uranium mine in northern Malawi in April.

Kandodo said the annual average inflation rate was expected to remain in single digits at around 9.7 percent.

"Due to the forward procurement system used in Malawi for petroleum products, the decrease in world fuel prices in the first and second quarter of 2009 will have a lagged effect," Kandodo said.

"The benefits to the country should be manifested in the third and beginning of the fourth quarter which will ease inflationary expectations for the year."

The southern African country expected an overall fiscal deficit of about 1.6 percent of gross domestic product.

"Such a deficit is deemed to be prudent since international best practices prescribe 3 percent as an upper limit." Kandodo said.

Malawi's economy is expected to be one of the fastest-growing in the world this year.