WTO foresees Middle East conflict impacting Malawi

The World Trade Organisation (WTO) says Malawi and other developing economies will be worst hit by the Middle East conflict which is pushing up global energy and fertiliser prices while slowing tourism spending. Speaking to journalists on Saturday on the sidelines of the WTO 14th Ministerial Conference in Yaoundé, Cameroon on Saturday, WTO chief economist Robert Staiger said the ongoing conflict remains the biggest risk to Africa’s trade forecast, especially developing economies with far-reaching implications for the continent. He said the impact will be felt through rising oil prices expected to slow economic activity in countries that rely on fuel imports and reduced travel, which will have a negative impact on tourism.

Staiger said the conflict is affecting food and farming through disruptions to the Strait of Hormuz, a key route for 20 percent of the world’s fuel and fertiliser supplies, which has seen increased prices, raising farming costs and threatening food security. He said: “The ongoing conflict in the Middle East is the biggest risk to Africa’s trade forecast. For Africa’s oil-exporting nations, higher energy prices caused by the conflict could actually increase their export revenues.

“However, for the rest of the continent, these same high prices will likely act as a drag on general economic activity because the rest of the continent is composed of economies that import unmet oil.” Since the start of the Middle East conflict, crude oil prices have jumped to around $90 (about K157 590) per barrel while liquefied natural gas prices in Asia have risen to around $16 (about K28 016) per million British thermal units. Malawi needs $600 million (about K1 trillion) annually for fuel import, according to Malawi Energy Regulatory Authority data, but generates just around $1 billion (about K1.7 trillion) in foreign exchange every year. Already, Malawian consumers are reeling from the January 2026 fuel price hike, which saw Malawi Energy Regulatory Authority (Mera) increase the fuel pump prices by an average of 41.6 percent.

[paywall]

The increase, which was in line with Automatic Pricing Mechanism, had put a litre of petrol at K4 695 from K3 499 and diesel at K 4 945 from K3 500 and came five months after Mera implemented a 33.16 percent fuel pump price increase in October last year. Ironically, due to the disruptions in the Middle East, international nitrogen fertiliser prices have reportedly risen by between 50 and 60 percent while phosphate fertilisers have increased by about 20 to 25 percent, a situation Fertiliser Association of Malawi projected will have negative impact on local prices. WTO has since warned that regions where petroleum represents a large fraction of exports, particularly in Africa, would see rising import volume growth consistent with increasing export revenues, while net oil-importing regions would see import growth slowing.

Speaking separately, WTO deputy director-general Xiangchen Zhang said due to structural challenges, African economies already export a low share of high-value added products than it does with raw commodities. Minister of Industrialisation, Business, Trade and Tourism, Simon Itaye, who is attending the conference, earlier observed that the WTO reform has been a long-standing demand of developing countries, adding that “Malawi supports a WTO reform.

[/paywall]