EIU forecasts annual inflation at 33.9%
The Economist Intelligence Unit (EIU) has projected Malawi’s 2024 annual inflation to rise 5.1 percentage points from 28.8 percent in 2023 to 33.9 percent.
In its quarterly projections, quoted in the Nico Asset Managers March 2024 Monthly Economic Report, EIU attributes this to the flexible exchange rate regime.
Reads the report in part: “Inflation is expected to increase from an average of 28.8 percent in 2023 to 33.9 percent in 2024, owing to ongoing deficit monetisation keeping money-supply growth high, alongside expected currency weakness as the RBM shifts to a flexible exchange rate and high global commodity prices.
“The Reserve Bank of Malawi [RBM] is expected to continue engaging in deficit financing until more significant financial support materialises later in the forecast period.”
Meanwhile, the investment advisory firm observes the current downward trend in inflation during the first quarter of 2024, which is expected to go into the second quarter on account of food relief and the harvest period, is short lived.
The EIU projection is higher than government’s forecast of 23.4 percent.
In an interview yesterday, Consumers Association of Malawi executive director John Kapito said the economy will pay a huge price for failing to boost production and control consumption with limited forex reserves.
In a separate interview, National Working Group on Trade and Policy chairperson Fredrick Changaya said the realistic assumption should be between 32 and 35 percent because of the impact of the November 44 percent kwacha devaluation last November.
