Malawi to feel recession impact for longer:FinMin

Despite signs that the worst of a recession in the global economy is over, Malawi will continue to feel its impact for some time, Finance Minister Ken Kandodo said on Monday.

"There are signs of the global crisis easing but I am of the opinion that the crisis may be with us for some time to come," Kandodo told Reuters in an interview.

"The impact of the crisis for us would mean lower prices for our main export commodities like tobacco, cotton, and coffee owing to a shrinkage in the demand for the commodities," he said.

Kandodo said the economy would slow to 7.9 percent in 2009 from 9.7 last year on the back of bountiful tobacco yields and a robust growth in the telecommunications sector.

"The projected slower growth is to some extent because of the effects of the global crisis but it is well above the recommended 6 percent growth."

"Inflation would remain at 9.7 percent this year and 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," Kandodo said.

Without giving exact figures, Kandodo said remittances from Malawians living abroad were likely to fall as a result of hardships brought about by the global recession.

He also said donor inflows, which account for over 50 percent of Malawi's development budget, would likely fall.

"The level of donor inflows could be affected through exchange rate movements," Kandodo said.

Kandodo, who presented his $1.8 billion 2009/10 fiscal budget last week, said the government is determined to maintain the momentum of economic growth as it seeks to mitigate the effects of the global economic downturn.

The 2009/10 budget proposes to increase civil servants salaries by 15 percent, raise the personal tax threshold and fight malaria -- the number one child killer -- by removing tax on mosquito nets to boost domestic output.

It also proposes to raise import duty to 25 percent from 10 percent on some agriculture products such as vegetables, meat offal, spices, potatoes, tea, powdered milk and nuts to encourage local production.