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Economist Mail, Lilongwe (2025)

07/08/2022

Vol 1 Issue 7

Sunday, August 7, 2022

Social Impact of Current Economic Environment

The world is going through an economic crisis and it has negatively affected both first and third world economies. Malawi is no exceptional.

However, this global crisis has caused negative social impact on citizenry.

Detoriating purchasing power. Most end users of products have reduced consumption of even basic things of life. This has affected even manufacturers of these products.

Family break ups. Of late there is a rise in divorce. This should not come as a surprise. Most men feel too much pressure supporting a family when they fail even to sustain even themselves from the little they earn. Additionally, most young men are indecisive to marry because of the prevailing economic environment. Therefore, married women take care of your marriages.

The teenagers mostly in primary school are not motivated to pursue with their education because of tough times they are going through. They are assisting their parents to find today's bread. Education has become of secondary importance.

The unending su***de cases is a sign of frustration by most people. They visionalize a hopeless future which can not address their challenges.

However, Malawians will one day reach their economic development or prosperity period and reflect back how they went through in all these challenges.

'Unearthing Economic News'

08/05/2022

Sunday, May 8 2022.

Vol 1 Issue 6

Impact of Upward Interest Rate Adjustment

In the course of last week, Reserve Bank of Malawi announced policy rate increase from 12% to 14%. However, this is a necessary evil in all aspects. Inflation rate at 14.1%, really it was inevitable. However, this action would result into;

1. The cost of borrowing at commercial banks would definitely go up therefore this will deter investment by potential borrowers or investors. Because the interest on borrowing will go up.

2. As a result of contraction of investment it might indirectly and negatively affect the achievement of Social Economic Recovery Plan (SERP) 2021-2023.

3. RBM has been fair enough, because the adjustment has been done to curtail inflation rate currently at 14.1%. There is an assumption that from May inflation may start easing downwards due to availability of food- which is the highest component of Consumer Price Index (CPI), otherwise an adjustment to 15% was ideal.

4. When interest rates go up the price of bonds go down. So speculators have to take note of that, otherwise you may lose your capital outlay.

In conclusion, monetary authority (RBM), should be commended for taking a bold decision as inflation increase is on a supersonic speed.

'Unearthing Economic news'

22/04/2022

Friday, April 22, 2022.

Vol 1 Issue 5

News From Around the World Economies

Malawi Macroeconomic Stats.
Exchange rate = K825/$1
Inflation Rate = 13%
Policy Rate = 12%
Liquidity Reserve Ratio = 3.75%
Unemployment Rate = N/A

Malawi: Following the coming to an end of rainy season, the inflation is likely to slow down as a result of food availability ( food inflation is the biggest component in overall inflation).

South Africa: The Rand will weaken due to floods and Covid-19 pandemic. On Thursday, there were over 4400 new infections.

Ukraine: Ukraine govt needs $7 bn every month to stimulate the economy as a result of Russia's invasion.

USA: United States will provide $800 m military aid package to Ukraine.

China: That country's commercial hub- Shanghai is experiencing a surge in Covid -19 cases. On Thursday, there were 18200 new cases.

Chinese first Q1 of 2022 has seen its GDP growing to 4.5%. The growth is giving hope to the economy amid Covid-19 surge.

'Unearthing Economic News'

19/04/2022

Vol. 1 Issue 4

Tuesday, April 19, 2022

Economic Development Complementary Role

Malawi of today has capable and able human capital as compared to that of 1960s. There are more young people with both technical and other skills obtained from tertiary education. However, this potential is underutilized because lack of focus on real issues. Economic development will not come on a silver platter but we need to work for it.

1.Of late, the Attorney General has struck off some companies not to do any business with govt, consequently the gap has been created. This is an opportunity to fill the gap left by these companies and bid for govt tenders. The goodness of this is that money will not be transferred to offshore accounts but will remain in the country.

2. Countrymen, one secret of successful business is joint ventures. Let's move away from this narrative 'ndi changa'. Time has come whereby two or three should pool together different abilities and skills run businesses as separate entities. Let's emulate FISD, a brainchild of Malawians who mobilized resources and now they are counted.

3. Our big companies such as banks who are making supernormal profits need to diversify investments amid the current global crisis. They can partner with companies and go into full time irrigation production of crops which are on high demand such as wheat, sunflower etc so that we reduce imports amid scarcity.

4. Population growth rate in Malawi is surpassing economic growth rate. In this case, as citizens let's help govt in reducing children per family not as a law but morals. The Gross National Product (GNP) per capita is reducing because Malawi's GDP is growing at a decreasing rate but population growth is growing at geometrical progression. The govt is failing to deliver some social services to the public as a result of this.

The govt is not only for the rulers but citizens inclusive. Citizens should not play second fiddle to foreigners in economic development.

'Unearthing Economic News'

14/04/2022

Thursday, 14th April, 2022.

Vol 1 Issue 3

News from Around the World Economies

Malawi Macroeconomic Stats
Inflation rate = 13%
Policy rate= 12%
Liquidity Reserve Rate = 3.75%
Unemployment rate = N/A

*Kenya - Kenyan govt has committed to invest $1.6 bn in DRC following the latter's joining of East African Trade bloc. The investments will focus on mining.

*Algeria - The war in Ukraine has triggered Italy to redirect its focus on importing gas from Algeria (African largest producer) due to sanctions against Russia. The two countries have signed an agreement.

*USA- The state of New Jersey (USA) has frozen assets for Russian billionaire - Roman Abrahimovic worthy $75 bn.

*USA - The world biggest economy has experienced the highest inflation rate of 8.5% since 1981. Developing economies like that of Malawi will keep on being impacted.

*Ukraine - The Ukrainian economy will contract by 45.1% due to ongoing war. Almost half of the economy will collapse.

*Russia - The Russia's economy will contract by 11% as a result sanctions due to invasion on Ukraine.

'Unearthing Economic News'

10/04/2022

Sunday, 10th April, 2022

Vol. 1 Issue 2

Stabilizing the Exchange Rate

The exchange rate is the measure of the value of one currency in units of another currency. For example, K825/1$, therefore the dollar is the base currency.

The Malawi Kwacha has been experiencing volatility for quite a long time. Exchange rate however, is affected by trade- related factors (Inflation differentials, Income differentials & govt restrictions) and financial factors (Interest rate differentials, Capital flow).

The govt has been emphasizing on manufacturing our own products more especially those as a country we have capacity to do. The more we import goods from foreign economies the more the country is importing cost push inflation. Like it was rightly said in one of the write up that Ukraine/Russia war will have global economic repercussions. The much preached import substitution is needed to stabilize our exchange rate.

Malawi's main trading partner in SADC region is South Africa and trade balance is always in favour of the later. The SA Rand will always appreciate against Kwacha currency. The govt needs to reduce trade volumes with SA for non -essential products by imposing higher taxes or barriers although this may be contrary to some custom treaties.

Amid higher inflation rate, interest rate also increases (Fischer's Effect), Malawi can attract foreign portfolio investment however, investors do not only focus on attractive interest rates but also economic growth etc. The Malawi Kwacha is illiquid and can not attract serious investors or capital inflows.

The authorities should continue preaching the gospel according to being a manufacturing and exporting economy otherwise the kwacha will keep on having perpetual nose diving. However, the private sector should reset their thematic areas, the food industry is one area they should invest their capital.

'Unearthing Economic News'

06/04/2022

Wednesday, March 6, 2022.

Vol. 1 Issue 1

Economic News From Around the World

*Malawi Economic Stats:
Inflation Rate: 13%
Policy rate: 12%
Liquidity Reserve Ratio: 3.75%
Unemployment rate: N/A

* Zimbabwe - Inflation rate in Zimbabwe has been increased from 60%- 80% to curb rising cost of goods.

*South Africa - The authorities in RSA have from today increased fuel prices between 26%-28%. Definitely this will trigger price increase of goods which could impact even Malawi being the main trading partner in SADC region.

Still in South Africa, that country's unemployment rate has reached 35.3%. For Malawi could be double of that.

*Kenya - Due to failure of govt of Kenya to pay arrears to fuel dealers, there is shortage of the commodity in that country where there are long queues in gasoline stations fighting for an opportunity.

*DRC - That country's Central Bank maintained a policy rate of 7.5% to attract investment for local industries.

*USA - As the war rages on in Ukraine, there is short of gas in many countries since Russia is the main supplier even to NATO countries, as a result of this, USA has released 1 billion barrels of gas from its strategic reserves to cushion the citizens from disrupted supply chain. While Malawi do not have such capacity.

*Unearthing Economic News*

04/04/2022

4th March, 2022.

Editor's Note

Dear Esteemed readers,

This page is meant to brainstorm on socio-economic challenges affecting our country Malawi and beyond. The editor is not 100% on the know-how about solutions to our fragile economy but also depends on your meaningful contributions.

The knowledge pooled together will benefit both parties and assist our country the way forward. Criticisms, corrections and additions are welcome anyway.

We hope to build an everlasting rapport for the benefit of everyone who has appended his/her liking to the page.

Together we can.

Editor.

Economist Mail

07/08/2022

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22/04/2022

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