Benefits and Drawbacks of Devaluation
By Twinkspurge Jones Gadama……
Devaluation of the Malawian currency by 44% has been the catch word for every conversation, be it in minibus, churches, schools,even on social media. The feedback from the citizenry has been all cries as every thing including basic needs have gone up.
However salaries remain as they were except civil servants who have received a mockery 10% increment.
The increment by the government has however received criticism from Reserve Bank of Malawi as that will make the government seek debts,and goods and services may likely go up if companies also think of increasing salaries.
Devaluation of a country’s currency can have both benefits and drawbacks. It may provide certain advantages to a country’s economy, particularly for poor citizens. This article provides few potential benefits.
Devaluation can make a country’s goods and services relatively cheaper in the global market, which may enhance its export competitiveness. This can lead to increased demand for domestically produced goods, potentially benefiting industries and generating employment opportunities.
In addition to that Devaluation can make a country more affordable for foreign tourists, leading to an increase in tourist arrivals. This can stimulate the tourism industry, create jobs, and generate revenue, potentially benefiting citizens working in related sectors.
Not only that but also Devaluation can make imported products relatively more expensive, providing a competitive advantage to domestic industries. This can promote local production, stimulate job creation, and reduce dependency on imports.
However, it is essential to consider potential drawbacks as well. Devaluation can also lead to inflation, making imported goods costlier and potentially impacting the purchasing power of citizens. Moreover, if a country relies heavily on imports or has significant external debt, devaluation could increase the burden of servicing such debts. Therefore, policymakers need to carefully assess the overall economic conditions and consequences before implementing currency devaluation.
Feedback: Jonesgadama@gmail.com
By Twinkspurge Jones Gadama…….
Devaluation of the Malawian currency by 44% has been the catch word for every conversation, be it in minibus, churches, schools,even on social media. The feedback from the citizenry has been all cries as every thing including basic needs have gone up.
However salaries remain as they were except civil servants who have received a mockery 10% increment.
The increment by the government has however received criticism from Reserve Bank of Malawi as that will make the government seek debts,and goods and services may likely go up if companies also think of increasing salaries.
Devaluation of a country’s currency can have both benefits and drawbacks. It may provide certain advantages to a country’s economy, particularly for poor citizens. This article provides few potential benefits.
Devaluation can make a country’s goods and services relatively cheaper in the global market, which may enhance its export competitiveness. This can lead to increased demand for domestically produced goods, potentially benefiting industries and generating employment opportunities.
In addition to that Devaluation can make a country more affordable for foreign tourists, leading to an increase in tourist arrivals. This can stimulate the tourism industry, create jobs, and generate revenue, potentially benefiting citizens working in related sectors.
Not only that but also Devaluation can make imported products relatively more expensive, providing a competitive advantage to domestic industries. This can promote local production, stimulate job creation, and reduce dependency on imports.
However, it is essential to consider potential drawbacks as well. Devaluation can also lead to inflation, making imported goods costlier and potentially impacting the purchasing power of citizens. Moreover, if a country relies heavily on imports or has significant external debt, devaluation could increase the burden of servicing such debts. Therefore, policymakers need to carefully assess the overall economic conditions and consequences before implementing currency devaluation.
Feedback: Jonesgadama@gmail.com
