AUGUST 2020 AUGUST 2020
NOVEMBER 2020 1
MONTHLY ECONOMIC REPORT NOVEMBER 2020
Contents LIST OF ACRONYMS ...... 3 EXECUTIVE SUMMARY ...... 4 ECONOMIC OVERVIEW ...... 6 Inflation (Source: NSO) ...... 6 Government Securities (Source: RBM) ...... 6 Foreign Currency Market (Source: RBM) ...... 6 Interbank Markets and Interest Rates (Source: RBM)...... 6 Stock Market (Source: MSE) ...... 7 OTHER MARKET DEVELOPMENTS ...... 9 Tobacco Markets Update (Source: TCC & JTILM) ...... 9 Humanitarian Assistance Expected to Improve Outcomes to Stressed Levels (Source: FEWS NET) ...... 9 Monthly Maize Market Update (Source: IFPRI) ...... 9 Tea Production and Sales Update (Source: RBM) ...... 9 Affordable Inputs Program (AIP) Faces Challenges in Distribution and Supply (Source: Malawi Nation Newspaper) .. 10 Commodity and Market Prospects for 2020/2021 Growing Season (Source: MITC) ...... 10 Prospects for 2020/2021 Rainfall Season in Malawi (Source: Ministry of Forestry and Natural Resources) ...... 11 REGIONAL MARKET DEVELOPMENTS ...... 12 GLOBAL DEVELOPMENTS ...... 15 CURRENCY MOVEMENTS...... 16 OUTLOOK FOR NOVEMBER 2020 AND BEYOND – MALAWI ...... 18 ECONOMIC RISKS ...... 23 APPENDIX ...... 25 Appendix 1: Selected economic indicators for Malawi (RBM, MSE, MERA, NSO)...... 25 Appendix 2: Selected economic indicators for Tanzania, Uganda, Zambia and Mozambique ...... 25 Appendix 3: Budget Framework (Source: Ministry of Finance) ...... 26 Appendix 4: Central Government Budgetary Operations in billions of Kwacha (Source: RBM) ...... 27 Appendix 5: Malawi selected Economic indicators (Source: RBM) ...... 28 Appendix 6: GDP—Malawi (Source: EIU) ...... 29 Appendix 7: Contribution to GDP by sector (Source: NSO,RBM) ...... 30 Appendix 8: Malawi Economic growth Projections (Source: EIU) ...... 30 Appendix 9: Global Projections (Source: IMF) ...... 31 Appendix 10: Seasonal calendar for a typical year (Source: Fews NET) ...... 32
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
LIST OF ACRONYMS
ADF: African Development Fund MVAC: Mobile Vulnerability Assessment AfDB: African Development Bank Committee BOE: Bank of England MW: Mega Watts BHL: Blantyre Hotels Plc NBM: National Bank of Malawi Plc BWB: Blantyre Water Board NBS: NBS Bank Plc CPI: Consumer Price Index NGOs: Non-Governmental Organisations DSI: Domestic Share Index NICO: NICO Holdings Plc ECB: European Central Bank NITL: National Investment Trust Plc ECF: Extended Credit Facility NSO: National Statistical Office EIU: Economist Intelligence Unit OECD: Organisation for Economic Co- ESCOM: Electricity Supply Corporation of operation and Development Malawi OMO: Open Market Operations EU: European Union OPEC: Organization of the Petroleum EUR: Euro Exporting Countries FEWS NET: Famine Early Warning Systems PCL: Press Corporation Plc Network RBM: Reserve Bank of Malawi FAO-GIEWS: Food and Agricultural Organization RBZ: Reserve Bank of Zimbabwe Global Information and Early Warning Rmb: Chinese Renminbi System RTGS: Real Time Gross Settlement FISP: Farm Input Subsidy Program SARB: South Africa Reserve Bank FMBCH: FMB Capital Holdings Plc SDF: Southern Dark Fired Tobacco FOB: Free On Board SSA: Sub Sahara Africa FSI: Foreign Share Index Sunbird: Sunbird Tourism Plc GBP: British Pound TB: Treasury Bills GDP: Gross Domestic Product TCC: Tobacco Commission GFS: Government Finance Statistics TICAD: Tokyo International Conference on IDA: International Development African Development Association TNM: Telekom Networks Malawi Plc IFAD: International Fund for Agricultural WEO: World Economic Outlook Development WFP: World Food Programme IFPRI: International Food Policy Research WTO: World Trade Organisation Institute TSH: Tanzania Shillings IMF: International Monetary Fund UBOS: Ugandan Bureau of Statistics MASI: Malawi All Share Index UGX: Ugandan Shillings MASL: Meters Above Sea Level UK: United Kingdom MB/D: Million barrels per day UNOCHA: United Nations Office for the MERA: Malawi Energy Regulatory Authority Coordination of Humanitarian Affairs MITC: Malawi Investment and Trade Center USA: United States of America MK: Malawi Kwacha US$: United States Dollar MPC: Monetary Policy Committee ZAR: South African Rand MSE: Malawi Stock Exchange ZimVAC: Zimbabwe Vulnerability Assessment MT: Metric Tonnes Committee MRA: Malawi Revenue Authority ZMK: Zambian Kwacha
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
EXECUTIVE SUMMARY
Economic Outlook — Malawi
The Malawi Kwacha depreciated against the United pandemic has significantly impacted different sectors States Dollar in November 2020. The downward including tourism and accommodation; wholesale trend is mainly attributed to a decline in foreign and retail trade; health services and manufacturing exchange supply which has in turn put pressure on activities (Source: Reserve Bank of Malawi). the country’s foreign exchange reserves. Malawi has faced reduced trading activity due to the COVID-19 The 2020/2021 fiscal year budget has projected an pandemic resulting in a widened trade deficit of overall deficit of K530.1 billion, representing 7.45% of MK1.13 trillion. The spill over effects of the COVID- Gross Domestic Product (GDP). In the face of the 19 pandemic have led to lower than expected export devasting economic impact of the COVID-19 earnings amidst the growing demand for COVID-19 pandemic, the International Monetary Fund (IMF) and related imports and seasonal agriculture materials. the World Bank urged bilateral creditors to suspend The negative balance of payment caused by such debt repayment by the world’s poorest countries, developments has led the Reserve Bank of Malawi to including Malawi. However, the Ministry of Finance intervene in the foreign exchange market, as long as has shelved the plan to request for debt suspension, sufficient reserves are available, and support on the basis that the economy could pay dearly if debt commercial banks until things improve. repayment was suspended than servicing it despite economic hiccups. In line with the COVID-19 pandemic, the International Monetary Fund revised downwards Malawi’s Malawi’s economic outlook faces considerable economic growth for the years 2020 and 2021 to downside risks: the impact of the COVID-19 0.6% and 2.2.% respectively. pandemic, weather shocks and fiscal slippages. However, due to significant reduction in COVID-19 The Malawi Government also revised downwards its cases in recent months, most restrictions have been 2020 economic growth projections from 1.90% to lifted and this has led to a pickup in economic activity. 1.20%, reflecting adverse impact of the coronavirus There is a general increase in income-earning pandemic. The pandemic is affecting the country opportunities for households impacted by layoffs, through two specific channels: spill overs from the business closures and reduced demand for labor and changes in the global environment and the impact of trade. However, income-earning is not yet back to regional economic slowdown. The COVID-19 normal.
Key Economic Risks – Malawi
1. Insufficient power supply - Will lead to lower productivity and dampen economic growth. 2. High government debt levels - Create a future obligation for the government to repay the debt plus interest. 3. Persistently weak export base - Affects the Kwacha’s stability against the major currencies as import values exceed export values. 4. High population growth rates - May reduce the country’s ability to allocate resources to more productive activities. 5. Coronavirus pandemic - Affects the operations of all businesses and unplanned government heavy expenditure on medical supplies and enforcement of measures to mitigate its spread and effects.
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Economic Highlights for November 2020 — Malawi
The headline inflation for October 2020 increased to During the month of November 2020, the average 7.50% from 7.10% recorded in September 2020. This retail maize price decreased by 3% (September was due to a rise in food inflation which went up to 2020: 6% increase) at MWK196/kg, which is 2% 10.90% (September 2020: 10.30%) (Source: NSO). higher than in November 2019 (Source: IFPRI).
During the month of November 2020, the all-type Tea production in September 2020 amounted to 2.7 Treasury bill yield decreased to 12.03% from 12.23% million kilograms, higher than 1.3 million kilograms the previous month (November 2019: 7.54%) produced in August 2020 and lower than 2.1 (Source: RBM). kilograms registered in September 2019 (Source: Liquidity levels in November 2020 increased to a RBM). daily average of K12.55 billion from K6.92 billion in October 2020. Access to the Lombard facility The Affordable Inputs Program (AIP), launched in (discount window borrowing) during the month under October 2020 is faced with supply challenges owing review averaged K42.02 billion a day. This was at an to inadequate capacity of contracted firms and average rate of 12.84% and an average of K48.96 logistical inefficiencies in the supply chain (Source: billion was accessed on the Lombard Facility during Malawi Nation Newspaper). the month of October 2020 at an average rate of 13.70% (Source: RBM). The Malawi Investment and Trade Centre (MITC) through its Business Information Unit will be providing In the month of November 2020, the Malawi Kwacha information on production and market prospects for depreciated against all the major currencies. As at 30 selected commodities and products. Recently, the November 2020, the United States Dollar was trading MITC released a report on the prospectus of the at MK760.53/US$ compared to MK755.33/US$ 2020/2021 growing season, which focused on pigeon recorded on 31 October 2020 (November 2019: peas, groundnuts, soybeans and common beans. MK741.68/US$) (Source: RBM). The aim of this report is to support a market-led As at 30 November 2020, total forex reserves stood production practice and to enhance the profitability of at US$917.41 million (4.39 months of import cover) a enterprises (Source: MITC). decrease from US$975.27 billion (4.67 months of import cover) registered at the end of October 2020 Between 2020 and December 2020, most of the (Source: RBM). southern and central areas are expected to receive normal to above-normal rainfall amounts while most The stock market was bearish in November 2020, of the northern areas are expected to receive normal with the Malawi All Share Index (MASI) decreasing to below-normal rainfall amounts (Source: Ministry of by 0.25% to close at 31,225.08 points from 31,303.78 Forestry and Natural Resources). points the previous month (Source: MSE)
The Tobacco Commission (TCC) has stated that the tobacco industry has on average been losing US$100 million annually in recent years due to low productivity and poor prices offered by buyers. (Source: Malawi Nation Newspaper, TCC).
Due to the above-average production year, most rural households are currently accessing adequate food from own production and market purchases with minimal outcomes expected to persist in most areas through at least May 2021 (Source: FEWS NET).
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ECONOMIC OVERVIEW
Inflation (Source: NSO) % % The headline inflation for October 2020 increased to CURRENCY Nov-20 Oct-20 Nov-19 Movement Movement 1 month 12 months 7.50% from 7.10% recorded in September 2020. This was due to an increase in food inflation as can be seen MK/USD 760.53 755.33 741.68 -0.69% -2.54% MK/GBP 1,014.55 974.45 959.02 -4.11% -5.79% in the table below: MK/ZAR 49.87 46.03 50.49 -8.35% 1.24% MK/EUR 910.43 882.15 817.23 -3.21% -11.40% Change Change Oct-20 Sep-20 Oct-19 1 Month 12 Months Headline The official forex reserves in November 2020 inflation 7.50% 7.10% 9.60% 0.40% -2.10% decreased to US$584.89 million (2.80 months’ worth Food 10.90% 10.30% 16.00% 0.60% -5.10% Non-food 4.40% 4.40% 4.30% 0.00% 0.10% of import cover) from US$635.05 million (3.04 months’ worth of import cover) recorded in October 2020. The Government Securities (Source: RBM) private sector reserves decreased to US$325.27 During the month of November 2020, the all-type million (1.59 months of import cover) from US3$40.22 Treasury bill yield decreased to 12.03% from 12.23% million (1.63 months of import cover) recorded in the previous month (November 2019: 7.54%). October 2020.
Change Change 12 Tenor Nov-20 Oct-20 Nov-19 1 Month Months As at 30 November 2020, total forex reserves stood at 91 days 9.95% 9.95% 6.13% 0.00% 3.82% US$917.41 million (4.39 months of import cover) a 182 days 12.73% 12.87% 7.33% -0.14% 5.40% decrease from US$975.27 billion (4.67 months of 364days 13.40% 13.88% 9.15% -0.48% 4.25% import cover) registered at the end of October 2020. All Type 12.03% 12.23% 7.54% -0.21% 4.49% Total Treasury bill applications for November 2020 Nov-20 Oct-20 Nov-19 % 1 month % 12 months (US$ million) (US$ million) (US$ million) change change stood at K2.03 billion and K2.03 billion was allotted Official Reserves 584.89 635.05 603.82 -7.90% -3.14% representing a nil rejection rate. The 364 days paper Private Sector 332.52 340.22 292.23 -2.26% 13.79% Total 917.41 975.27 896.05 -5.93% 2.38% accounted for the highest subscription rate at 98.18%, Import Cover (Months) followed by the 91 days paper at 1.67% and the 182 Gross Official 2.8 3.04 2.89 -7.89% -3.11% days paper at 0.15%. Private Sector 1.59 1.63 1.40 -2.45% 13.57% Total 4.39 4.67 4.29 -6.00% 2.33% During the month of November 2020, the government conducted Treasury notes auctions for a 3 year and 7- Interbank Markets and Interest Rates year tenor at an average yield of 17.79% and 19.95% (Source: RBM) respectively. There were applications of K17.81 billion Liquidity levels in November 2020 increased to a daily but K16.73 billion was allotted resulting in a 7% average of K12.55 billion from K6.92 billion in October rejection rate. 2020. Access to the Lombard facility (discount window borrowing) during the month under review averaged Total maturities for government securities for the K42.02 billion a day. This was at an average rate of month amounted to K41.40 billion resulting in a net 12.84% and an average of K48.96 billion was injection of K22.64 billion. accessed on the Lombard Facility during the month of October 2020 at an average rate of 13.70%. Foreign Currency Market (Source: RBM) In the month of November 2020, the Malawi Kwacha In November 2020, the overnight borrowing between depreciated against all the major currencies as shown banks decreased to a daily average of K6.53 billion. in the following table: This was at an average rate of 12.58% and an average of K7.09 billion per day was accessed in October 2020 at an average rate of 13.62%.
The reference rate for the month of December 2020 has decreased to 12.30% (November 2020: 13.60%).
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
Stock Market (Source: MSE)
The stock market was bearish in November 2020, with The year on year return for MASI and DSI increased the Malawi All Share Index (MASI) decreasing by by 6.88% and 17.88% respectively, while the FSI 0.25% to close at 31,225.08 points from 31,303.78 decreased by 66.14%. The market registered a 3.22% points the previous month (November 2019: 6.88% year to date return compared to a return of 0.80% increase).The market registered three gainers during recorded during the same period in 2019. The the month of November 2020: FMBCH (0.05% dividend yield for November 2020 stood at 2.74% increase), FDH Bank (10.75% increase) and PCL (November 2019: 2.03%). (4.06% increase). There were six losers registered on Change (1 Change the market: Airtel (3.28% decrease), ICON (0.08% Counter Nov-20 Oct-20 Nov-19 month) (12 months) decrease), MPICO (3.93%), NBM (0.0032% MK/Share MK/Share MK/Share % % AIRTEL 28.00 28.95 N/A -3.28% N/A decrease), NBS (0.19% decrease) and TNM (3.15% BHL 12.94 12.94 12.95 0.00% -0.08% FMBCH 22.02 22.01 75.00 0.05% -70.64% decrease). During the month of November 2020, the FDHB 13.29 12.00 N/A 10.75% N/A ICON 12.29 12.30 10.50 -0.08% 17.05% Domestic Share Index (DSI) decreased by 0.26% to ILLOVO 80.50 80.50 153.00 0.00% -47.39% MPICO 22.99 23.93 19.50 -3.93% 17.90% 26,717.15 points from 26,787.57 points recorded the NBM 617.68 617.70 460.02 -0.0032% 34.27% previous month. The Foreign Share Index (FSI) NBS 20.91 20.95 12.50 -0.19% 67.28% NICO 52.00 52.00 48.50 0.00% 7.22% increased by 0.04% to 1,362.89 from 1,362.39 points NITL 94.97 94.97 75.00 0.00% 26.63% OMU 2199.98 2199.98 2,499.99 0.00% -12.00% registered in October 2020. PCL 1398.57 1343.99 1,400.00 4.06% -0.10% STANDARD 851.00 851.00 670.00 0.00% 27.01% SUNBIRD 105.00 105.00 118.00 0.00% -11.02% The volume of shares traded in November 2020 TNM 19.35 19.98 26.00 -3.15% -25.58% decreased to 22.67 million from 659.98 million traded MASI 31,225.08 31,303.78 29,215.23 -0.25% 6.88% DSI 26,717.15 26,787.57 22,664.18 -0.26% 17.88% in October 2020. The traded value on the shares for FSI 1,362.89 1,362.39 4,024.86 0.04% -66.14% November 2020 decreased to MK3.18 billion from MK13.08 billion in October 2020. Below is a presentation of the published 2020 and 2019 half year financials and trading statements for the respective companies.
Published Half Year Financials for 2020 and 2019 Net Profit/(Loss) (MK'Billion) Total Dividend (Per Share) (Kwacha) Period Aug-20 Aug-19 % Change Aug-20 Aug-19 % Change ILLOVO 2.74 10.08 -72.84% 2.00 0.50 300.00% Period Jun-20 Jun-19 % Change Jun-20 Jun-19 % Change AIRTEL 11.42 2.02 465.35% 0.00 0.00 0.00% ICON 2.11 2.52 -16.27% 0.11 0.10 10.00% NBS BANK 2.84 1.41 102.42% 0.45 0.00 100.00% STANDARD 12.63 8.09 56.12% 10.65 8.95 18.99% NBM 9.07 9.13 -0.61% 5.35 5.35 0.00% NITL 0.35 0.67 -48.48% 0.50 0.50 0.00% SUNBIRD (1.34) 1.20 -211.61% 0.00 0.50 -100.00% TNM 4.97 6.71 -25.93% 0.18 0.00 100.00% NICO 7.64 7.29 4.80% 0.67 0.60 11.67% PCL 12.69 11.17 13.66% 6.00 6.00 0.00% MPICO 2.51 3.58 -30.01% 0.00 0.10 -100.00% FDH 3.22 3.35 -3.88% 0.00 0.00 0.00% Net Profit/(Loss) (US$' million) Total Dividend (Per Share) (US$) FMBCH 14.29 5.08 181.30% 0.00 0.00 0.00% TRADING STATEMENT Expects its half year ending 30 September 2020 profit after tax to be at least 200% BHL lower than the previous corresponding period Expects its half year ending 31 December 2020 profit after tax to be at least 25% NBS BANK higher than the previous corresponding period 7
MONTHLY ECONOMIC REPORT NOVEMBER 2020
Trend Graphs
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
OTHER MARKET DEVELOPMENTS outcomes. Given continued gradual economic recovery following the COVID-19 pandemic impacts, Tobacco Markets Update (Source: TCC stressed harvest outcomes are expected in urban areas in 2021 from January to May. & JTILM)
The Tobacco Commission (TCC) has stated that the Monthly Maize Market Update (Source: tobacco industry has on average been losing US$100 IFPRI) million annually in recent years due to low productivity and poor prices offered by buyers. During During the month of November 2020, the average the 2020 Tobacco Industry Conference, the TCC retail maize price decreased by 3% (September acting Chief Executive Officer stated that the crop is 2020: 6% increase) at MWK196/kg, which is 2% facing a myriad of challenges, including the anti- higher than in November 2019. Prices fell in 13 smoking lobby, poor prices and weather-related markets, remained constant in 10 markets, and rose challenges affecting output. The Commission is in 3 markets. The largest price decline was recorded planning to increase competition among buyers and in Lunzu (17%) followed by Salima (12%) and improve prices by engaging old buyers who left the Chimbiya (9%) markets. The largest price increases industry. The Ministry of Agriculture further stated were recorded in Mzuzu (6%), Chiringa (5%) and that it will speed up the crafting and gazetting of the Karonga (2%). Tobacco Industry Act regulations to do away with some of the challenges. Alliance One Tobacco In the month of November 2020, ADMARC had no Managing Director also suggested that it was high purchases in any of the 26 markets monitored by time the industry discussed better return for farmers, IFPRI, but sales were reported in 8 of the 26 markets. not only through pricing but also best practices.
In the 2019/2020 season, tobacco consolidated trade demand dropped to 132 million kilogrammes (kgs) from 161 million kgs owing to bad weather. During the 2020/2021 season, the Tobacco Commission issued 46,684 licences with 163 million kgs, which is a drop from 53,170 licenses and 173 million kgs issued in the 2019/2020 season. Regionally, weather effects also negatively affected the crop’s production with Zimbabwe registering 30%, Tanzania 38%, Mozambique 25% decline in tobacco production (Source: Malawi Nation, TCC).
Humanitarian Assistance Expected to Improve Outcomes to Stressed Levels (Source: FEWS NET) Tea Production and Sales Update (Source: RBM) Due to the above-average production year, most rural households are currently accessing adequate food Tea production in September 2020 amounted to 2.7 from own production and market purchases with million kilograms, higher than 1.3 million kilograms minimal outcomes expected to persist in most areas produced in August 2020 and lower than 2.1 through at least May 2021. However, some kilograms registered in September 2019. Tea sales households in the four cities of Malawi are faced with through the Limbe auction market amounted to 0.4 localized production shortfalls. In these areas, million kilograms same as in the previous month, at humanitarian assistance, anticipated to start in the an average price of US$1.7. Total average tea sales December 2020 to April 2021 period, is expected to earning realised at the Limbe auction market were improve crisis harvest outcomes to stressed level 9
MONTHLY ECONOMIC REPORT NOVEMBER 2020
US$0.6 million virtually same as that recorded in Commodity and Market Prospects for August 2020. 2020/2021 Growing Season (Source: MITC) Affordable Inputs Program (AIP) Faces Challenges in Distribution and Supply (Source: Malawi Nation Newspaper) The Malawi Investment and Trade Centre through its Business Information Unit will be providing information on production and market prospects for The Affordable Inputs Program (AIP), launched in selected commodities and products. Recently, the MITC released a report on the prospectus of the October 2020 is faced with supply challenges owing 2020/2021 growing season, which focused on pigeon to inadequate capacity of contracted firms and peas, groundnuts, soybeans and common beans. logistical inefficiencies in the supply chain. The The aim of this report is to support a market-led program is intended to supply 428,000 tons of production practice and to enhance the profitability of fertilizer through 85 selected firms as part of 158.3 enterprises. billion AIP, however, at least 40 companies have not met their contracted capacity. The MITC has projected that during the 2020/2021 growing season, the demand for Pigeon peas will be Interviews with officials knowledgeable about the around 550, 000 tones. The projection is very high issue have shown that reasons why firms are failing since India, Malawi’s main buyer is about to lift the to meet their contractual obligation range from delays three-year ban which was imposed on the crop. to secure financing from banks to insufficient fertilizer Regarding the production of groundnuts, the on the market due to high volume quantity demanded commodity has had an upward trend from 296,498,00 by the AIP. The selected suppliers either have no metric tons (MT) in 2015 to 417,990 MT in 2019 and money to order the input, or the distribution is still yet to increase to 500,000 MT in the growing infrastructure to take the products to designated season for 2020/2021. The projected increase has areas, or both. been attributed to the adoption of new varieties by the Among the suppliers who are able to take the inputs smallholder farmers and favorable rain fall which has to farmers, there are several firms only distributing in been forecast by the Ministry of Agriculture. The one extension planning area (EPA), due to network global demand of groundnuts is expected to increase glitches. The narrow distribution outreach worsened due to the disturbed production, which is due to the as 180,000 tons of fertilizer (42% of the AIP COVID-19 pandemic hence positive price prospects component) are held up at the ports of Beira and for the product. Nacala in Mozambique. Some indigenous firms have According to the Ministry of Agriculture and Food indicated that their failure to meet distribution Security, it is estimated that during the 2020/2021 deadlines is due to delays of some commercial banks growing season, the production of soybeans could allegedly taking time to complete processing increase from 222,865 tons recorded in 2019, to additional documentation of accessing loans set by 350,000 MT due to the good rains that Malawi will the Ministry of Agriculture. Furthermore, among the receive. While on the demand side, it is projected that 83 private sector AIP suppliers (out of 85 selected there will be an increase in 2021, because of the suppliers), 47 of them have not yet started distribution scarcity of the commodity at the international because they do not have the necessary financing, markets, duly to the global COVID-19 pandemic, those that managed to access finances have which affected production in most countries and struggled with network challenges. These challenges hence Malawi could grab this opportunity by have reduced the number of bags being sold per day. increasing its supply on the commodity. The demand The AIP supply challenges are raising fears that for beans both at local and international market is delayed delivery of fertilizer will mean that most quite huge. It is estimated that the 2020/2021 growing people failing to access it in time and therefore season will surpass the 2019 demand of 81,713 tons resulting in lower productivity levels and reduced due to the rise in demand for the commodity. harvest in 2021. This will likely lessen harvest income and threaten food security.
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
Prospects for 2020/2021 Rainfall Season receive normal to above-normal rainfall amounts. in Malawi (Source: Ministry of Forestry However, pockets of dry conditions are expected mostly over south and center areas. and Natural Resources) The rainfall forecasts imply that during the 2020/2021 rainfall season, there is a high chance of many parts Between October 2020 and December 2020, most of of the country receiving good rainfall. However, the southern and central areas are expected to weather events such as floods in prone area are likely receive normal to above-normal rainfall amounts to occur due to heavy rains while some parts of the while most of the northern areas are expected to country are likely to experience pockets of prolonged receive normal to below-normal rainfall amounts. dry spells during the season. Between January 2021 and March 2021, most areas in the south, center and the north are expected to
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
REGIONAL MARKET DEVELOPMENTS
Sub-Saharan Africa (SSA) 12.04% decrease. Exports which mainly comprise of domestically produced goods decreased by 7.9% on The overall economic activity in Sub-Saharan Africa account of a 9.5% fall in export earnings from has been revised to contract by 3.0% in 2020 before intermediate goods. Imports decreased by 4.5% as a recovering by 3.1% in 2021. This is due to some key result of a decrease in imports of consumer goods downside risks, particularly regarding the continued and raw materials (Source: Zambia Statistics Office). surge of the COVID-19 pandemic, the resilience of In response to extrernal borrowing, budget the region’s hard-pressed health systems, and the projections and capital spending which are all no outlook for external financing. longer credible, the EIU expects the fiscal deficit to
widen to 6.2% of GDP, from an estimated 7.5% of Countries in the region have cautiously started to GDP in 2020. The fall in expenditure outweighs the reopen their economies amid the high economic and drop in revenue caused by a second consecutive social costs. In this context, policymakers are aiming year of economic contraction in 2021. Steep cuts in to rekindle their economies despite fewer resources capital spending and an increase in tax and mineral at their disposal. Significant financial gaps are likely revenue will then shrink the deficit further to 1.3% of to prevail as countries will struggle to maintain GDP in 2025 from an earlier estimate of 1.5% of GDP macroeconomic stability while also meeting the basic in 2024. The deficits will be financed mainly by needs of their population. This will cause countries to domestic borrowing (Source: EIU). face some difficult choices and be forced to address unsustainable debt burdens. The Monetary Policy Committee (MPC) has decided
to maintain the Monetary Policy Rate at 8.0%. The Capital outflows from emerging and frontier market MPC’s decision aims at moderating risks towards economies, have been triggered by tighter global financial stability and growth, people’s lives and financial conditions that continue to persist. This has livelihoods in the wake of the COVID-19 pandemic. resulted in sharp widening of the interest rate The MPC noted that financial stability remains fragile spreads. Furthermore, remittance inflows are despite signs of marginal improvement in economic expected to drop by about 20% leading to a pressing activity in the third quarter following the partial concern, given that remittances have surpassed relaxation of COVID-19 pandemic restrictions. Foreign Direct Investment (FDI) and official Although growth is expected to recover in the development inflows in recent years (Source: IMF). medium-term, limited fiscal space, as well as
uncertainity surrounding the persistence of the Zambia COVID-19 pandemic and access to external financing remain key downside risks to growth The year on year inflation rate for November 2020 prospects. In this regard, successfully navigating the increased to 17.40% from 16.00% recorded in debt restructuring process to restore debt October 2020. The increase in the annual rate of sustainability and implementing fiscal and other inflation was attributed to price increases in both food structural reforms are critical to return to fiscal fitness and on non-food items. The year-on-year food and macroeconomic stability (Source: Bank of inflation rate for November 2020 was recorded at Zambia). 16.80% compared to 14.60% recorded in October
2020. This development was mainly attributed to increases in prices of food items such as vegetables, Zimbabwe meats, chicken, fats and oil and sugar. The year-on- year non-food inflation rate for November 2020 was Zimbabwe’s year on year inflation rate for November recorded at 18.20% compared to 17.70% recorded in 2020 eased to 401.66% from 471.25% recorded in October 2020 (Source: Zambia Statistics Office). October 2020. It is the lowest inflation rate recorded since January 2020, as a stabilizing exchange rate is Zambia recorded a trade surplus in October 2020 at easing price pressures. On a monthly basis, prices ZMK6.50 billion from ZMK7.39 billion indicating a 12
MONTHLY ECONOMIC REPORT NOVEMBER 2020
increased by 3.15% compared to 4.37% in October The Monetary Policy Committee for Bank of 2020 (Source: Reuters, Reserve Bank of Zimbabwe). Tanzania, after assessment of the performance and outlook of the economy, has projected a 5.5% The Reserve Bank of Zimbabwe initially projected the economic growth rate in 2020. The World Bank, economy to grow by 3% in 2020, drive by anticipated however, expects economic growth for Tanzania to positive performances in the key sectors. However, slow to 2.5% in 2020. This is based on a significant due to the COVID-19 pandemic and another drought decline in tourism, a major contributor to GDP growth, year, the economy is now expected to contract by despite the country reopening for tourism in June 4.5% in 2020, with the declines cutting across all 2020. According to the World Bank, a full recovery in sectors of the economy. 2021–2022 will require government attention to reforms to improve the business environment as a The IMF has projected growth in 2020 to average key input to bolster recovery of the private sector 0.8%, following another poor harvest leading to food (Source: Bank of Tanzania, World Bank). shortages and the sharp contraction in 2019. With no progress on clearing longstanding external arrears, Uganda the authorities face a difficult balance of pursuing tight monetary, to reduce very high inflation, and The Annual Headline Inflation for the year ended fiscal policies to address the macroeconomic November 2020 decreased to 3.7% from 4.5% imbalances and build confidence in the currency, recorded in October 2020. The decline in annual while averting a crisis (Source: IMF). headline inflation is mainly attributed to the Annual Core Inflation that decreased to 5.8% for the year Tanzania ended November 2020 compared to the 6.3% registered for the year ended October 2020. The Annual headline inflation for the month of October annual Energy Fuel and Utilities (EFU) inflation 2020 has stagnated at 3.1% as it was recorded in declined to minus 1.4% in November 2020 from 1.3% September 2020. Food and non-alcoholic beverages recorded in October 2020. (Source: Uganda Bureau inflation rate for the month of October 2020 has of Statistics). stagnated at 3.4% as it was recorded in September 2020. Annual inflation rate for food consumed at The Bank of Uganda, at the Monetary Policy home and away from home for the month of October Committee (MPC) meeting of October 2020 has 2020 has slightly decreased to 4.4% from 4.5% maintained the Central Bank Rate (CBR) at 7%. recorded in September 2020. The annual Inflation Economic indicators for the quarter to September rate which excludes food and energy for the month of 2020, pointed to a mild recovery of economic activity October 2020 slightly decreased to 2.4% from 2.5% with estimated growth of 2% from a sharp contraction recorded in September 2020 (Source: Tanzania of 6% in the second quarter to June 2020. The National Bureau of Statistics). simultaneous fiscal, monetary, and financial stimuli have been effective in avoiding the most negative The Bank of Tanzania continued to implement economic consequences of the COVID-19 pandemic accommodative monetary policy in supporting the shock. The easing of the lockdown, the stability of the economy to withstand spill over adverse shocks exchange rate, as well as a feeble improvement in arising from the COVID-19 pandemic. The both foreign and domestic demand are supporting supportive monetary condition led extended broad economic growth recovery. However, economic money supply (M3) to increase by TZS 1,650.3 billion growth is tepid, uneven, and still fragile. It is projected in the year ending October 2020. This was equivalent to contract in the range of 0.2% and 0.5% in 2020. to an annual growth of 5.9%, compared to 6.5% recorded in September 2020. Broad money supply The downside risks to the economic growth (M2) grew by 10.7% compared to 9.1% in September projection include the possibility of an increase in new 2020. The growth of money supply was largely infections and a longer period to get the virus under explained by increase in domestic credit. control. Uganda remains highly vulnerable to periodic spouts of global financial volatility, stemming from continued global economic weakness and 13
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geopolitical tensions, and increasing protectionism. In addition, the flow of Private Sector Credit (PSC) Better global economic and financial conditions saw could remain subdued due to commercial the South African Rand (ZAR) appreciate by 6.9% banks facing increasing Non-Performing Loans since September 2020. The Rand (ZAR) has, (NPLs), high lending interest rates in the face of weak however, depreciated by 8.7% against the US Dollar economic activity and increase in domestic financing since January and remains below its estimated long- of the fiscal deficit. On the upside, economic growth run equilibrium value. The implied starting point for could recover swiftly than currently projected if the the Rand forecast is ZAR16.50 to US Dollar, threat from COVID-19 fades more quickly than compared with R16.90 recorded in September 2020. currently envisaged and global economic growth strengthens. Such a scenario could lead to greater The Monetary Policy Committee (MPC) notes that the business and consumer confidence, which factors slow economic recovery will keep inflation below the would likely lead to a stronger domestic economic midpoint of the target range for the year 2020 and growth. (Source: Bank of Uganda). 2021. Against this backdrop, the MPC decided to keep rates unchanged at 3.5% per annum. The South Africa implied policy rate path of the Quarterly Projection Model indicates no further repo rate cuts in the near The annual consumer price inflation (CPI) rate for term, and two rate increases in the third and fourth October 2020 increased to 3.30% from 3.00% quarters of 2021. Furthermore, the MPC has eased recorded in September 2020. The main contributors financial conditions and improved the resilience of to the increase were food and non-alcoholic households and firms to the economic implications of beverages; housing and utilities; and miscellaneous COVID-19 pandemic and continues to be good and services (Source: Statistics South Africa). accommodative. The Bank has taken important steps to ensure adequate liquidity in domestic markets and South Africa’s economic activity is now projected to regulatory capital relief has been provided, sustaining contract by negative 8.0% compared to 8.2% lending by financial institutions to households and projected in September 2020. This revision is mainly firms. due to further easing of the lockdown restrictions which has supported economic growth, coupled with Further measures to improve the potential growth high frequency indictors continuing to show a pickup rate of the economy or reduce fiscal risks are to be in economic activity. South Africa’s terms of trade implemented in order to enhance the effectiveness of remain robust as commodity export prices are high, monetary policy and its transmission to the broader while oil prices remain generally low. economy (Source: Bank of South Africa).
* Refer to Appendix 2 for more details on historical inflation and currencies for selected countries.
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GLOBAL DEVELOPMENTS
Economic growth than projected remain sizable.
Besides combating the deep near-term recession, According to the October 2020 World Economic policymakers have to address complex challenges to Outlook (WEO) update, global growth is projected at place economies on a path of higher productivity negative 4.40% in 2020, 0.50% points below the June growth while ensuring that gains are shared evenly, 2020 WEO forecast. The revision reflects better- than and debt remains sustainable. Policies to support the anticipated second quarter GDP outturns, mostly in economy in the near term should therefore be advanced economies, where activity began to designed with an eye to guiding economies to paths improve sooner than expected after lockdowns were of stronger, equitable, and resilient growth. Tax and scaled back in May and June 2020. This was further spending measures should privilege initiatives that complimented by indicators of a stronger recovery in can help lift potential output, ensure participatory the third quarter. growth that benefits all, and protect the vulnerable. In
all instances, adhering to the highest standards of Global growth rate for 2021 is projected at 5.20%, a debt transparency will be essential to avoid future little lower than that projected in June 2020 WEO rollover difficulties and higher sovereign risk update. This reflects the more moderate downturn premiums that raise borrowing costs across the projected for 2020 and is consistent with expectations economy. of persistent social distancing. Following the contraction in 2020 and recovery in 2021, the level of With the pandemic continuing to spread, all global GDP in 2021 is expected to be a modest countries— including those where infections appear 0.60% above that of 2019. The growth projections to have peaked—need to ensure that their health imply wide negative output gaps and elevated care systems can cope with elevated demand. unemployment rates in 2020 and in 2021 across both Countries where infections continue to rise need to advanced and emerging market economies. contain the COVID-19 pandemic with mitigation
measures that slow transmission. Economic policy in After the rebound in 2021, global growth is expected such cases should limit the damage by cushioning to gradually slow to about 3.5 percent into the income losses for affected people and firms, while medium term. This implies only limited progress also supporting resource reallocation away from toward catching up to the path of economic activity contact-intensive sectors that are likely to be for 2020–25 projected before the pandemic for both constrained for an extended period. Retraining and advanced and emerging market and developing reskilling should be pursued to the extent feasible so economies. It is also a severe setback to the that workers can look for jobs in other sectors. projected improvement in average living standards across all country groups. The baseline projection As countries reopen, policies must support the assumes that social distancing will continue into 2021 recovery by gradually removing targeted support, but will subsequently fade over time as vaccine facilitating the reallocation of workers and resources coverage expands and therapies improve. Local to sectors less affected by social distancing, and transmission is assumed to be brought to low levels providing stimulus where needed to the extent everywhere by the end of 2022. The medium-term possible. Some fiscal resources freed from targeted projections also assume that economies will support should be redeployed to public investment. experience scarring from the depth of the recession Moreover, as lifelines are unwound, social spending and the need for structural change, entailing should be expanded to protect the most vulnerable persistent effects on potential output. where gaps exist in the safety net. Where inflation
expectations are anchored, accommodative The uncertainty surrounding the baseline projection monetary policy can help during the transition by is unusually large. The forecast rests on public health containing borrowing costs (Sources: IMF). and economic factors that are inherently difficult to predict. However, the risk of worse growth outcomes 15
MONTHLY ECONOMIC REPORT NOVEMBER 2020
Global Oil Prices
The non-OPEC liquids production forecast in 2020 more than US$100 billion in financial assistance to 81 has been revised marginally lower by 0.06 million countries, helping to stabilize their external positions. barrels per day (mb/d) in October 2020 from the September 2020 assessment, leading to a In Asia, sharp exchange-rate depreciations across contraction of 2.4 mb/d year on year (y-o-y). This is emerging markets have largely been reversed, but due to production outages in the US Gulf of Mexico, this has not been the case in other regions. In Latin as well as lower-than-expected output in Norway, the America and Sub-Saharan Africa, currencies are UK, and Mexico. The non-OPEC liquids production expected to remain under pressure in 2021 and forecast for 2021 has been revised higher by 0.06 beyond. The two regions are expected to bear mb/d, to average 0.95 mb/d, mainly due to higher coronavirus-induced economic scars for a long time; expected production in 2021. recover only slowly and large external financing gaps.
The global oil demand forecast for 2020 is revised The U.S. Dollar index has fallen drastically since May down by 0.3 mb/d, given weaker-than-expected 2020 owing to abated global risk aversion and demand and the recent additional COVID-19 investors’ concerns about the spread of the pandemic containment measures by various coronavirus outbreak in the US. The U.S. Dollar is governments. Transportation and industrial fuel are projected to remain strong in 2021 to 2022 as the expected to remain adversely affected throughout the economy recovers faster than other advanced fourth quarter of 2020. As a result, world oil demand economies. The EIU expects the currency to stabilize is now expected to contract by around 9.8 mb/d, y-o- at lower values in 2023 to 2025 as the global y, in 2020. For 2021, oil demand growth is expected economy recovers. to grow by 6.2 mb/d, y-o-y, representing a downward revision of 0.3 mb/d compared to 6.5 mb/d, y-o-y, The Euro has experienced a period of high volatility recorded in September’s assessment. These throughout 2020 owing to a depreciation against the downward revisions mainly consider downward US dollar at the start of 2020. This followed a rapid adjustments to the economic outlook in Organisation appreciation of the Euro after the EU announced the for Economic Co-operation and Development establishment of a new recovery fund worth (OECD) economies due to COVID-19 pandemic US$892.5 billion. In 2021 the EIU projects that the containment measures, with the accompanying single currency will stabilize as the euro zone starts adverse impacts on transportation and industrial fuel to recover. In 2022, muted inflation and growth demand through mid-2021. prospects in the euro zone will force the European Central Bank (ECB) to maintain its ultra-loose The OPEC Reference Basket (ORB) fell by US$1.46 monetary policy stance, prompting a slight to US$40.08/barrel (b) in October 2020 (September depreciation of the Euro against the US currency. 2020: US$41.54/b). OPEC crude oil production in The EIU expects the Euro to strengthen from 2023 October 2020 increased by 0.32 mb/d m-o-m to onwards (Source: EIU) average 24.39 mb/d (September 2020: 24.11 mb/d) according to secondary sources (Source: OPEC). Global trade
Currency movements The World Trade Organization (WTO) has now projected that world merchandise trade volume will
decline by 9.2% (from 12.9%) in 2020, followed by a The spread of the coronavirus pandemic caused 7.2% (from 21.3%) rise in 2021. These estimates are heightened volatility in financial markets throughout subject to an unusually high degree of uncertainty 2020. A global flight to safety at the onset of the owing to the evolution of the coronavirus pandemic pandemic triggered a chain of balance-of-payment and government responses to it. crises across emerging markets, especially in Sub- Saharan Africa and Latin America. The IMF deployed The world market-weighted GDP in 2020 is estimated at negative 4.8% compared to negative 2.5%
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projected earlier in the WTO April forecast. This Latin America and Africa will remain modest amid a revision is due to GDP results of the first half of 2020 slow economic recovery. The fiscal position of many which showed that GDP fell more expected. In 2021, countries will remain under pressure in 2021, GDP growth is expected to pick up to 4.9%, but this complicating any policy effort to shore up domestic is highly dependent on policy measures and on the consumption (Source: EIU). severity of the coronavirus pandemic (Source: WTO) Interest Rate Movements The spread of the coronavirus pandemic has put significant pressures on global trade in 2020, with US Libor rates increased during the month of volumes falling by an estimate of 10.6% this year. November 2020 as compared to the month of This is a slightly less than the 11.8% contraction October 2020. The 3 months US Libor increased to recorded in 2009 during the global financial crisis. close at 0.233% from 0.214% in October 2020. The China prevented a deeper cratering in global trade US Libor rate for 6 months increased to 0.260% from activity as its economic recovery began as early as 0.243% recorded in October 2020. the second quarter of 2020. The swift return of Chinese production put the country in prime position At the beginning of March 2020, the Federal Reserve to meet soaring global demand for healthcare had slashed interest rates in response to the products and electronics amid a worldwide demand economic fallout caused by the fast-spreading for personal protective equipment and a shift to coronavirus pandemic. This had an impact on the remote working. The low global price environment U.S. Treasury yield (10 years), causing the also prompted China to stockpile energy benchmark to drop below 1% for the first time. As of commodities, underpinning a high volume of fuel November 2020, the U.S. Treasury yield (10 years) imports. Meanwhile domestic infrastructure stimulus- increased to close at 0.862% from 0.821% recorded maintained demand for imports of iron ore, coal, in October 2020. All other yields, in the United States, copper and other mining commodities. were down across the board as investors grabbed safe-haven treasuries amid the uncertainty. The US In Asia, trade flows are expected to be aided by the Libor rates, and the 10 Treasury yield are gradually region's overall success in containing the coronavirus increasing, however not steadily. (Sources: pandemic and China's swift recovery. The EIU also Macrotrends & Reuters). expects a solid trade recovery in western Europe in 2021, but this will partly reflect a low statistical base. Change Change Trade prospects in the US will improve as the Nov-20 Oct-20 Nov-19 1 month 12 months US Fed Rate 0.250% 0.250% 2.000% 0.000% -1.75% administration of the new president-elect restores US Libor (3 months) 0.233% 0.214% 1.910% 0.019% -1.68% consumer and investor confidence, which had both US Libor (6 months) 0.260% 0.243% 1.900% 0.017% -1.64% faltered as a result of the coronavirus crisis and the US Treasury yield (10 years) 0.862% 0.821% 1.769% 0.041% -0.91% BOE Rate 0.100% 0.100% 0.750% 0.000% -0.65% erratic trade policy. By contrast, trade performance in ECB Rate 0.000% 0.000% 0.000% 0.000% 0.000%
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OUTLOOK FOR NOVEMBER 2020 AND BEYOND – MALAWI
Exchange Rates upward trajectory in 2021-23, peaking at 10.6% in 2023. In these years the uptick in inflation will reflect The Malawi Kwacha depreciated against the United rising global fuel prices and a recovery in private States Dollar in November 2020. The downward consumption (supported by increased disposable trend is mainly attributed to a decline in foreign income from rising agricultural output in those years). exchange supply which has in turn put pressure on The EIU expects an accommodative monetary policy the country’s foreign exchange reserves. Malawi has stance in 2021 will build inflationary pressures and faced reduced trading activity due to the COVID-19 thereafter, inflation will trend downwards to 9.2% in pandemic resulting to a widened trade deficit of 2025 as fuel prices drop (EIU). MK1.13 trillion. The spill over effects of the COVID- 19 pandemic have led to lower than expected export The coronavirus has also impacted heavily on the oil earnings amidst the growing demand for COVID-19 industry which has seen significant decrease in related imports and seasonal agriculture materials. global oil prices. This has assisted in mitigating Malawi, being an agrarian economy with tobacco still soaring prices of goods and services which would being the top export crop, sold 112.89 million otherwise have led to a higher inflation rate projection kilograms (kgs) of tobacco in 2020 compared to than the current one. Despite the EIU’s increase in 165.67 million kgs sold in 2019, realizing US$173.5 inflation projections, the Malawi government remains million. Furthermore, the country is currently optimistic on its projections for 2020 inflation. importing high volumes of fertilizer and seeds under The 2020 SONA projected that the inflation rate of the MK158.3 billion Affordable Input Program causing Malawi has been decelerating and this has been due a trend of growing import bills. The negative balance to the decline in food inflation. The subdued industrial of payment caused by such developments has led demand for maize, declining domestic fuel prices, the Reserve Bank of Malawi to intervene in the and stable exchange rates have also been foreign exchange market, as long as sufficient contributing factors to the decline of the inflation rate reserves are available, and support commercial (Source: EIU & Ministry of Finance). banks until things improve. Headline inflation increased for the first time in 2020 However, the rate of depreciation is projected to be to 7.50% recorded in October 2020 from 7.10% moderated by increasing foreign investment inflows recorded in September 2020. This is mainly attributed and earnings from the agricultural sector. Further aid to rising food and non-food prices. In 2019 during the inflows are expected to help narrow the external same period headline inflation rate was recorded at imbalances relative to the float of the Kwacha in the 9.6%, which means that prices of goods and services upcoming months and as the governments of Malawi are rising at a slower pace in 2020. Inflation is now embarks on projects following the 2020/2021 fiscal projected to average 8.6% in 2020 from 9.8% year budget. This will improve investor confidence projected during the Third MPC Meeting of July 2020. from 2021 and increased earnings from agricultural In 2021, it is anticipated that inflation will continue to exports is expected to provide modest support for the decline (Source: RBM) Kwacha (Source: EIU). Maize prices are expected continue to increase and POSSIBLE IMPACT: The depreciation of the follow seasonal trends but remain above five-year Kwacha in expected to moderate and could lead to average levels. Typical seasonal price increases are stable import costs and relatively high cost domestic expected in the coming months, driven by increasing exports on the international market. demand as more households run out of own- Inflation produced food and demand from government institutions which might put upward pressure on After headline inflation declining to an estimate of prices (Source: Fews.net). 8.5% in 2020, the EIU has projected that inflation will follow trends in global fuel prices and maintain an POSSIBLE IMPACT: High inflation rates raise the 18
MONTHLY ECONOMIC REPORT NOVEMBER 2020
cost of investment thereby hampering private sector down restriction measures (Source: RBM). growth. Alternatively, lower inflation rates may lead to POSSIBLE IMPACT: Lower export values may reduced interest rates which could increase private decrease the inflow of forex which could widen the sector investments and disposable income for trade balance if inflows are unsustainable. expenditure. External Sector Monetary Policy
Trade balance is expected to remain in structural Following the decline of the headline inflation since deficit throughout the forecast period, owing to January 2020 and favourable appearances of the Malawi's dependence on fuel and capital imports. inflation outlook, the Monetary Policy Committee Although export earnings are forecast to increase in (MPC), at its fourth meeting of November 2020 2021-25, amid a gradual recovery in external decided to reduce the policy rate to 12.00% (July demand, import spending is also projected to pick up. 2020: 13.50%). Meanwhile the MPC maintained the Liquidity Reserve Requirement (LRR) ratio on The trade deficit is projected to narrow gradually domestic and foreign deposits at 3.75% and the throughout the forecast period as export growth Lombard rate at 20 basis points above the Policy rate. outpaces rising import spending from 2021 following This decision is aimed at supporting economic gradual economic growth and work commences on recovery and job creation (Source: Reserve Bank of capital projects, particularly in the energy sector. Malawi).
The services account deficit will remain broadly flat, Depending on the longevity of the pandemic and the before declining in 2023-25, as service receipts from impact it will continue to have on the financial tourism increase. The deficit on the primary income institutions and business, EIU expects the central balance reflects profit repatriation by the mining bank to continue taking prudent steps throughout sector and is also expected to remain flat before 2020 in order to prevent an economic meltdown in the widening slightly towards the end of the forecast country. It is expected that the central bank will period as coal mining picks up. continue to maintain its accommodative stance in 2021 to support a domestic recovery from the impact The current-account deficit is expected to widen from of the COVID-19 pandemic. It will then adopt a an estimated 16.8% of GDP in 2020 to 17.8% of GDP tightening stance from 2022 to 2025 as inflationary in 2023 as import demand and global fuel prices pick pressures build on the back of rising global oil prices up. Thereafter, the current-account deficit will narrow and improved consumer sentiment (Source: EIU). slightly to 17.4% in 2025 as oil prices decline. However, the forecasts are contingent on normal POSSIBLE IMPACT: Low lending rates reduce the rainfall patterns, and any major disruption would cost of borrowing which stimulate private sector prompt a downward revision to agricultural exports activity, resulting to economic growth. However, it and an upward revision to food imports, causing the may also lead to low propensity to save as savings deficit to widen. The deficits will be financed primarily rates also decline. by project-related grants and concessional borrowing (Source: EIU) International Relations
The Reserve Bank of Malawi has recorded a trade Malawi and Norwegian governments have signed a deficit stood at US$1.5 billion during the first nine K3.97 billion grant agreement aimed at promoting months of 2020, compared to a deficit of US$1.1 sustainable food systems in Malawi. Through the billion recorded in the corresponding period of 2019. grant, the government of Norway will help Malawi Cumulatively, from January to September 2020, implement various activities including research and exports amounted to US$0.5 billion against imports farmer-outreach programs. The food systems of US$2.0 billion. Meanwhile, inward remittances, approach is expected to address the systematic more particularly from South Africa, have picked up challenges related to food production, distribution, in recent months to US$52.5 million in the third access, marketing and nutrition, especially now when quarter of 2020 from US$32.1 million in the second the COVID-19 pandemic has had a negative impact quarter of 2020, largely on account of easing lock- on Malawi’s agriculture sector. 19
MONTHLY ECONOMIC REPORT NOVEMBER 2020
The United Kingdom (UK) will be providing income government units and MK12.5 billion for other relief to at least 8,000 households in different statutory expenses. The expenses have increased by countries within the Southern Africa region, including 29% as compared to the 2019/2020 approved Malawi, believed to have been affected by a drop in estimates. This is largely on the account of increased remittances from South Africa due to the COVID-19 allocation on social benefits, public debt interest and pandemic. The income relief is expected to help wages and salaries. many of whom are female-led families improve The 2020/2021 fiscal year deficit will be financed by access to COVID-19 information, basic services and foreign borrowing amounting to MK224.8 billion and protected livelihoods. The UK will provide an average MK530.1 billion from domestic borrowing (Source: of almost K14,000 per month to help the families Malawi Government). access food, rent, school fees and meet immediate needs (Source: Malawi Nation). The Malawi Government is expected to follow a policy of gentle consolidation over the remainder of Regarding foreign affairs, the 2020 SONA affirmed 2020 while seeking to rebalance spending in favor of Malawi’s pursuit towards a vibrant engagement with capital investment. It is also expected that the fiscal neighbors and regional organizations (SADC, deficit will widen in 2020/2021, as welfare measures COMESA, AU and UN). While Malawi is expected to to mitigate the impact of the outbreak keep spending fully integrate in various relations worldwide, further elevated. Assuming that greater control is exercised discussions were made on the country’s pursuit at a over current spending in line with IMF regional level. The SONA stated that Malawi’s focus recommendations, the deficit will contract gradually is to integrate within the framework of Southern to 8.10% of GDP in 2023/24 (Source: EIU). African Development Community (SADC) in fields of trade and industry and in the maintenance of peace In the face of the devasting economic impact of the and security. COVID-19 pandemic, the International Monetary Fund (IMF) and the World Bank urged bilateral The public institutional reforms that the new creditors to suspend debt repayment by the world’s government is implementing may ease the fears of poorest countries. The former governing donors as transparency in operations is expected to administration of Malawi, Democratic Progressive improve. This would hopefully boost further aid that Party (DPP), applied to international lending partners will be used for development in the country. to suspend loan repayments due to the economic POSSIBLE IMPACT: External support is increasing challenges induced by the COVID-19 pandemic. the availability of forex, leading to the continued However, the current Ministry of Finance has shelved stability in Kwacha and maintained reserve of the the plan to request for debt suspension, on the basis required three months import cover threshold. that the economy could pay dearly if debt repayment was suspended than servicing it despite economic Fiscal Policy hiccups. Furthermore, the Ministry felt that large chunks of the loans were already repaid and what The 2020/2021 fiscal year budget has projected an remains are minimal amounts. overall deficit of MK754.8 billion. Total revenue and grants are pegged at MK1.435 trillion comprising The International Monetary Fund (IMF) also stated MK1.179 trillion of domestic revenue and MK0.256 that Malawi has a strong capacity to settle its dues trillion for grants. This represents a decrease in under Rapid Credit Facility (RCF) chunk and other projected resource envelop of 9% as compared to the facilities with other partners. However, the World 2019/2020 approved estimates. Total expenditure Bank still saw that Malawi has no fiscal space to amount to MK2.190 trillion. Out of this, MK1.679 respond and recover from external shocks such as trillion represents recurrent expenses and MK0.511 the COVID-19 pandemic. The World Bank’s country trillion account for acquisition of non-financial assets. manager for Malawi stated that Malawi relies too The major budget lines on expenses comprise of heavily on costly domestic commercial debt, creating MK523.7 billion for wages and salaries; MK376.0 new vulnerabilities. He further suggested that a fiscal billion for interest payments; MK308.9 billion for anchor is, and therefore, urgent and will require goods and services; MK266.0 billion for social credible budget targets (Source: Malawi Nation). benefits, MK177.2 billion for grants and other general 20
MONTHLY ECONOMIC REPORT NOVEMBER 2020
Economic Growth especially in the informal service sectors in urban and rural areas (Source: IMF, Malawi Nation). Due to the coronavirus pandemic, several institutions have revised downwards their projections for The World Bank projects the economic growth to Malawi’s economy. Based on the revised projections, decline to about 2.0% in 2020 due to the COVID-19 the economy will grow by an estimated average of outbreak, as better harvests are expected to be offset negative 0.03% in 2020, 3.08% in 2021 and 5.23% in by lower exports, private consumption and 2022. See the table below. investment due to an increase in risk aversion. This projection is subject to considerable uncertainty and Real GDP Growth Projections assumes a contained spread of the virus in Malawi 2019 2020 2021 2022 and limited social distancing policies. In the medium EIU 4.10% -3.90% 2.10% 4.40% term, growth is expected to pick up to around 5.3% in IMF 4.00% 0.60% 2.20% 6.00% 2022 due to a rebound in private consumption and WORLD BANK 4.40% 2.00% 3.50% 5.30% investment, combined with improving energy supply GOVERNMENT 5.00% 1.20% 4.50% and improved certainty following elections in mid- 2020. Despite this more optimistic projection, the Average Real GDP 4.38% -0.03% 3.08% 5.23% Bank was quick to mention that these figures might be revised anytime depending on how the country The Economist Intelligence Unit (EIU) has handles the pandemic (Source: World Bank). significantly revised downward its projection for the
Malawi’s economic growth from 4.40% to negative The Malawi Government has further revised 3.90% in 2020 and from 4.70% to 2.20% in 2021. This downwards its 2020 economic growth projections revision has been necessitated in anticipation of the from 1.90% to 1.20%, reflecting adverse impact of the impact that coronavirus will have on the economy. coronavirus pandemic. The pandemic is affecting the Sectors that have been hit hard include hospitality, country through two specific channels: spill overs tourism and transportation. These sectors contribute from the changes in the global environment and the significantly to the overall economy of Malawi and the impact of regional economic slowdown. The COVID- fact that they are hit hard by the virus entails that the 19 pandemic has significant impacted different whole economy will suffer as well (Source: EIU). sectors including tourism and accommodation;
wholesale and retail trade; health services and In line with the COVID-19 pandemic, the International manufacturing activities (Source: Reserve Bank of Monetary Fund has further revised downwards Malawi) Malawi’s economic growth for the years 2020 and
2021. Previously, the IMF had projected that due to The 2020/2021 fiscal year budget has projected an the impact of the virus the economy would grow from overall deficit of MK754.8 billion. Total revenue and 1.0% and 2.5% in 2020 and 2021 respectively. grants are pegged at MK1.435 trillion and total However, because of the poor macroeconomic expenditure amount to MK2.190 trillion. The outlook occasioned by the COVID-19 pandemic the 2020/2021 fiscal year deficit will be financed by figures have been revised downwards to 0.6% and foreign borrowing amounting to MK224.8 billion and 2.2% in 2020 and 2021 respectively. MK530.1 billion from domestic borrowing.
Following a robust performance in 2020 first half In the face of the devasting economic impact of the owing to a strong harvest and substantial government COVID-19 pandemic, the International Monetary spending, economic activity in the second half of Fund (IMF) and the World Bank urged bilateral 2020 is suffering from a further deterioration of global creditors to suspend debt repayment by the world’s outlook, resulting in substantially lower exports, a poorest countries, including Malawi. However, the worsening economic impact of the COVID-19 Ministry of Finance has shelved the plan to request pandemic and a longer persistence of the shock. The for debt suspension, on the basis that economy could IMF is concerned about such a lower-than expected pay dearly if debt repayment was suspended than growth rate that could further increase poverty levels servicing it despite economic hiccups.
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Malawi’s economic outlook faces considerable POSSIBLE IMPACT: Lower growth rates of the downside risks: the impact of the COVID-19 economy will result in lower employment rates, due pandemic, weather shocks and fiscal slippages. to slower industrial production and gains from retail However, due to significant reduction in COVID-19 sales, companies lower hiring to save money in the cases in recent months, most restrictions have been face of lower demand. lifted and this has led to a pickup in economic activity. There is a general increase in income-earning opportunities for households impacted by layoffs, business closures and reduced demand for labor and trade. However, income-earning is not yet back to normal.
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ECONOMIC RISKS ECONOMIC RISKS IMPACT ON THE ECONOMY MITIGATION MEASURES
Insufficient power 1. Commercial productivity remains small scale as large-scale 1. Encourage use of energy supply enterprises are difficult to implement with limited power supply. saver bulbs. 2. Low industrial productivity in the manufacturing sector resulting 2. Rehabilitate and develop in low economic productivity and dampening economic growth. new power plants. 3. Decline in tourism levels as it dampens tourists’ appetite to visit 3. Public-Private the country which results in lower income and growth in the Partnerships to enhance industry. energy production through 4. Deferment of development by investors. alternative power sources. 4. The entrance of Independent Power Producers (IPPs) may help boost power generation.
Coronavirus Pandemic 1. Unbudgeted government expenditure putting pressure on fiscal 1. Sensitising people on the discipline. dangers of the virus and 2. Reduced business activity due to closure of businesses and or practice hygiene. restrictions from the government to contain the spread of the
virus. 3. Increases in commodity and service prices e.g transportation. 4. Loss of human capital as result of deaths. 5. Reduction in international trading due to the lockdown in several countries.
High population growth 1. Reduced per capita income. 1. Civic education to raise rates 2. Over-crowding on public resources. awareness on the need to 3. Resources which could have been allocated to more productive have less children. activities are used to take care of the growing population.
Increase in government 1. Creates a future obligation for government which may keep the 1. Reduce government debt budget deficit large. expenditure by tightening 2. Crowds out the private sector hence reducing the expansion of fiscal policy. the private sector as funds are not available. 2. Increase government revenue base to finance debt.
Global tobacco lobby 1. Decline in demand for Malawi tobacco and services from 1. Diversify into other sectors (anti-smoking) supporting industries resulting in lower commodity prices. such as mining and cotton etc. 2. Reduction in export earnings (tobacco accounts for 60% of 2. Engage in aggressive Malawi’s export earnings). tourism marketing. 3. Reduced employment opportunities in the tobacco and supporting industry. 4. Lower income for farmers- small holder and commercial.
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
ECONOMIC RISKS IMPACT ON THE ECONOMY MITIGATION MEASURES
Incidents of alleged 1. It will lead to a misuse of resources as areas of great need do not 1. Tighter controls and measures with better theft and corruption receive the right resources and thereby hampering growth. within the public sector implementation of the 2. Loss of aid as donors become unwilling to support, which could policies. affect government spending and forex availability. 3. Negatively affect the ability for external borrowing even for the private sector due to the negative image of the country. 2. More transparency in the 4. Negatively impacts the country’s sovereign credit risk ratings. public sector and government.
Uncertainty in the 1. Dampening export demand for major export commodities i.e. 1. Diversification of export external environment tobacco, tea, cotton and sugar. base of products. 2. Declining investor interest in Malawi resulting in fewer investments and less foreign currency coming into the country. 3. Declining remittances from abroad, hence contributing to lower forex levels. 4. Reduced access to foreign capital, hence financing not available or difficulties in accessing letters of credit. 5. Impaired growth and Balance of Payments (BOP) due to declining exports and low foreign investments. 6. Decline in tourism levels leading to lower forex revenues.
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
APPENDIX Appendix 1: Selected economic indicators for Malawi (RBM, MSE, MERA, NSO)
Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 MK : US$ 741.68 738.87 7.41 741.10 741.02 741.02 741.38 743.05 744.74 748.52 751.37 755.33 741.68 MK : GBP 959.02 969.19 970.20 944.52 916.16 928.53 920.44 924.12 994.33 997.92 963.63 974.45 959.02 MK : ZAR 50.49 52.43 50.38 47.12 41.62 41.64 43.14 44.02 46.19 45.07 44.23 49.78 50.49 MK : EUR 817.23 825.65 819.22 813.85 819.92 809.87 833.38 845.25 903.26 891.19 880.90 882.15 817.23 Forex reserves (Source: RBM) Gross Official Reserves (US$'mn) 603.82 846.55 786.71 785.31 730.17 610.13 662.98 682.66 651.41 642.86 546.99 635.05 584.89 Private Sector Reserves (US$'mn) 292.23 324.07 308.40 320.80 295.55 303.27 324.96 327.01 342.01 316.74 318.47 340.22 332.52 Total Reserves (US$'mn) 896.05 1,170.62 1,095.11 1,106.11 1,025.72 913.40 987.94 1,009.67 993.42 959.60 865.46 975.27 917.41 Total Import Cover (months) 4.29 5.60 5.24 5.29 4.90 4.35 4.72 4.83 4.76 4.60 4.14 4.67 4.39 Inflation (NSO) Headline Inflation 10.40 11.50 11.10 11.00 9.80 9.40 8.70 8.50 8.00 7.60 7.10 7.50 Food 17.20 19.30 17.60 17.00 14.70 14.60 13.70 13.40 12.20 11.30 10.30 10.90 Non Food 4.70 4.90 5.10 5.40 5.10 5.00 4.50 4.50 4.40 4.40 4.40 4.40 Interbank Rates (Source: RBM) Monetary Policy Rate 13.50% 13.50% 13.50% 13.50% 13.50% 13.50% 13.50% 13.50% 13.50% 13.50% 13.50% 12.50% 12.50% Average Interbank Rate 10.48% 12.58% 13.75% 13.27% 13.40% 13.51% 13.48% 13.49% 13.58% 13.59% 13.61% 13.62% 12.58% Average Base Lending Rates 12.30% 12.50% 13.10% 13.40% 13.30% 13.20% 13.30% 13.40% 13.40% 13.60% 13.60% 13.60% 13.60% Treasury Bill Yields (Source: RBM) 91 day Treasury Bill yield 6.13% 6.19% 6.15% 8.46% 7.50% 7.67% 7.58% 7.54% 7.50% 9.85% 9.97% 9.95% 9.95% 182 day Treasury Bill yield 7.33% 8.73% 9.11% 8.46% 10.00% 11.35% 12.22% 12.55% 12.59% 12.87% 12.73% 364 day Treasury Bill yield 9.15% 10.54% 10.67% 9.91% 10.95% 12.44% 12.73% 13.10% 13.61% 13.73% 13.75% 13.88% 13.40% Stock Market Indices (Point) (Source: MSE) MASI 29,215.33 30,252.20 28,976.30 29,162.28 29,176.23 28,857.39 28,501.97 29,784.70 29,851.63 31,328.10 31,743.36 31,303.78 31,232.57 DSI 22,664.27 23,599.75 22,903.36 23,506.15 24,138.22 24,097.69 23,780.75 25,117.92 25,360.04 26,732.01 27,101.51 26,787.57 26,723.84 FSI 4,024.86 4,024.86 3,529.41 3,046.35 2,290.78 1,993.51 1,993.51 1,757.76 1,535.30 1,460.99 1,460.99 1,362.39 1,362.89 Fuel Prices per Litre (Source: MERA) Petrol 930.00 930.00 930.00 930.00 930.00 780.00 690.50 690.50 690.50 690.50 690.50 690.50 690.50 Diesel 924.00 924.00 924.00 924.00 887.00 765.00 664.80 664.80 664.80 664.80 664.80 664.80 664.80 Paraffin 710.00 710.00 710.00 710.00 693.60 625.00 441.70 441.70 441.70 441.70 441.70 441.70 441.70
Appendix 2: Selected economic indicators for Tanzania, Uganda, Zambia and Mozambique Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 TANZANIA Exchange rate US$ 2,288.32 2,287.93 2,288.57 2,289.38 2,289.90 2,291.28 2,291.90 2,296.51 2,297.84 2,297.62 2,297.63 2,297.68 2,297.67 GBP 2,953.30 3,002.91 2,996.66 2,950.67 2,843.37 2,844.74 2,833.13 2,832.29 2,980.18 3,059.51 2,956.82 2,994.45 3,067.85 ZAR 155.15 162.75 155.45 148.78 127.91 124.33 131.01 133.15 139.37 137.68 135.67 142.62 150.55 EUR 2,518.18 2,559.96 2,522.47 2,513.85 2,526.5 2,484.78 2,552.60 2,588.75 2,695.60 2,737.62 2,698.95 2,714.71 2,743.19 Inflation % 3.80 3.80 3.70 3.70 3.40 3.30 3.20 3.20 3.30 3.30 3.30 3.10 Bank rate % 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 12.00 UGANDA Exchange rate US$ 3,699.50 3,665.21 3,679.83 3,711.67 3,796.71 3,811.29 3,784.79 3,730.33 3,686.42 3,677.57 3,715.78 3,740.78 3,699.17 GBP 4,763.10 4,799.28 4,783.97 4,794.20 4,714.07 4,739.82 4,624.06 4,595.70 4,772.98 4,850.40 4,771.77 4,860.68 4,930.91 EUR 4,068.96 4,092.01 4,046.88 4,033.11 4,187.39 4,130.14 4,154.09 4,179.17 4,324.01 4,335.76 4,326.71 4,395.75 4,403.25 Inflation % 3.00 3.60 3.40 3.40 3.00 3.20 2.80 4.10 4.70 4.60 4.50 4.50 3.70 Central Bank Rate % 9.00 9.00 9.00 9.00 9.00 8.00 8.00 7.00 7.00 7.00 7.00 7.00 7.00 ZAMBIA Exchange rate US$ 14.57 14.05 14.78 15.05 18.11 18.62 18.31 18.14 18.26 19.51 20.02 20.42 21.01 GBP 18.79 18.56 19.41 19.40 22.44 23.29 22.62 22.32 24.02 26.01 25.72 26.47 28.04 ZAR 1.00 1.00 0.99 0.97 1.01 1.03 1.05 1.04 1.08 1.16 1.19 1.25 1.38 Inflation % 10.80 11.70 12.50 13.90 14.00 15.70 16.60 15.90 15.80 15.50 15.50 16.00 17.40 Bank rate % 10.25 10.25 11.50 11.50 11.50 11.50 9.25 9.25 9.25 9.25 9.25 8.00 8.00 MOZAMBIQUE US$ 63.67 62.07 63.89 65.21 66.73 67.78 69.70 70.32 70.82 71.57 72.57 73.44 74.65 ZAR 4.35 4.34 4.30 4.27 3.73 3.74 4.10 4.20 4.23 4.26 4.37 4.83 4.98 EUR 70.91 69.87 70.47 71.25 73.28 73.75 78.76 79.72 83.30 85.00 85.28 87.20 90.68 Inflation% 2.58 3.50 3.48 3.55 3.09 3.32 3.02 N/A N/A N/A N/A N/A N/A (Source: Bank of Zambia, Bank of Tanzania, Bank of Mozambique, Bank of Uganda)
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
Appendix 3: Budget Framework (Source: Ministry of Finance) 2018/2019 2018/2019 2019/2020 2019/2020 2020/2021 K'Billion (Approved) (Revised) (Proposed) (Revised) (Proposed) Tota Revenues 1,249 1,121 1,575 1,527 1,435
Domestic revenues 1,052 1,006 1,425 1,352 1,179 Grants 197 115 150 175 256 Budgetary support Earmarked grants Total Expenditure 1,455 1,452 1,737 1,842 2,190 Reccurent expenditure 1,120 1,160 1,299 1,371 1,679 Wages & Salaries 394 399 443 466 524 Interest on debt 183 224 244 244 376 Investment Expenditure 335 292 438 471 511 Deficit/Surplus (206) (331) (162) (315) (755) Deficit as a % of Revenue -16% -30% -10% -21% -53%
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
Appendix 4: Central Government Budgetary Operations in billions of Kwacha (Source: RBM)
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
Appendix 5: Malawi selected Economic indicators (Source: RBM)
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
Appendix 6: GDP—Malawi (Source: EIU)
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
Appendix 7: Contribution to GDP by sector (Source: NSO,RBM)
Appendix 8: Malawi Economic growth Projections (Source: EIU)
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
Appendix 9: Global Projections (Source: IMF)
Year over Year Difference from April 2020 Projections WEO Projections 1/ 2018 2019 2020 2021 2020 2021 World Output 3.6 2.9 –4.9 5.4 –1.9 –0.4 Advanced Economies 2.2 1.7 –8.0 4.8 –1.9 0.3 United States 2.9 2.3 –8.0 4.5 –2.1 –0.2 Euro Area 1.9 1.3 –10.2 6.0 –2.7 1.3 Germany 1.5 0.6 –7.8 5.4 –0.8 0.2 France 1.8 1.5 –12.5 7.3 –5.3 2.8 Italy 0.8 0.3 –12.8 6.3 –3.7 1.5 Spain 2.4 2.0 –12.8 6.3 –4.8 2.0 Japan 0.3 0.7 –5.8 2.4 –0.6 –0.6 United Kingdom 1.3 1.4 –10.2 6.3 –3.7 2.3 Canada 2.0 1.7 –8.4 4.9 –2.2 0.7 Other Advanced Economies 3/ 2.7 1.7 –4.8 4.2 –0.2 –0.3 Emerging Market and Developing Economies 4.5 3.7 –3.0 5.9 –2.0 –0.7 Emerging and Developing Asia 6.3 5.5 –0.8 7.4 –1.8 –1.1 China 6.7 6.1 1.0 8.2 –0.2 –1.0 India 4/ 6.1 4.2 –4.5 6.0 –6.4 –1.4 ASEAN-5 5/ 5.3 4.9 –2.0 6.2 –1.4 –1.6 Emerging and Developing Europe 3.2 2.1 –5.8 4.3 –0.6 0.1 Russia 2.5 1.3 –6.6 4.1 –1.1 0.6 Latin America and the Caribbean 1.1 0.1 –9.4 3.7 –4.2 0.3 Brazil 1.3 1.1 –9.1 3.6 –3.8 0.7 Mexico 2.2 –0.3 –10.5 3.3 –3.9 0.3 Middle East and Central Asia 1.8 1.0 –4.7 3.3 –1.9 –0.7 Saudi Arabia 2.4 0.3 –6.8 3.1 –4.5 0.2 Sub-Saharan Africa 3.2 3.1 –3.2 3.4 –1.6 –0.7 Nigeria 1.9 2.2 –5.4 2.6 –2.0 0.2 South Africa 0.8 0.2 –8.0 3.5 –2.2 –0.5 Memorandum Low-Income Developing Countries 5.1 5.2 –1.0 5.2 –1.4 –0.4 World Growth Based on Market Exchange Rates 3.1 2.4 –6.1 5.3 –1.9 –0.1 World Trade Volume (goods and services) 6/ 3.8 0.9 –11.9 8.0 –0.9 –0.4 Advanced Economies 3.4 1.5 –13.4 7.2 –1.3 –0.2 Emerging Market and Developing Economies 4.5 0.1 –9.4 9.4 –0.5 –0.7 Commodity Prices (U.S. dollars) 0.0 0.0 0.0 0.0 0.0 0.0 Oil 7/ 29.4 –10.2 –41.1 3.8 0.9 –2.5 Nonfuel (average based on world commodity import weights) 1.3 0.8 0.2 0.8 1.3 1.4 Consumer Prices 0.0 0.0 0.0 0.0 0.0 0.0 Advanced Economies 8/ 2.0 1.4 0.3 1.1 –0.2 –0.4 Emerging Market and Developing Economies 9/ 4.8 5.1 4.4 4.5 –0.2 0.0 London Interbank Offered Rate (percent) 0.0 0.0 0.0 0.0 0.0 0.0 On U.S. Dollar Deposits (six month) 2.5 2.3 0.9 0.6 0.2 0.0 On Euro Deposits (three month) –0.3 –0.4 –0.4 –0.4 0.0 0.0 On Japanese Yen Deposits (six month) 0.0 0.0 0.0 –0.1 0.1 0.0
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
Appendix 10: Seasonal calendar for a typical year (Source: Fews NET)
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MONTHLY ECONOMIC REPORT NOVEMBER 2020
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