Malawi continues to face significant macroeconomic challenges despite progress in governance and democracy, with the African Development Bank (AfDB) citing low growth, high inflation, foreign exchange shortages and debt distress as major constraints to recovery.
In its latest assessment, the AfDB says real gross domestic product averaged below two percent between 2020 and 2024 and is projected at two percent in 2025.
The bank attributes the weak performance to both demand-side and supply-side constraints that have weighed on economic activity and weakened private sector growth.
Reads the report, in part: “Demand-side constraints have suppressed private sector activity, including falling real incomes, inflationary pressures, tight monetary policy and foreign exchange shortages.
“On the supply side, recurrent weather shocks have weakened agricultural output.”
According to the AfDB, inflation remains elevated due to food supply disruptions, global commodity price volatility, logistical challenges and climate shocks.
The AfDB further notes that although exchange rate volatility has stabilised, foreign exchange reserves remain critically low at less than 0.7 months of import cover, with imports exceeding exports by more than three times in 2024.
Despite these challenges, the bank said the outlook remains positive, noting that while Malawi’s economy continues to face significant structural and external challenges, the medium-term outlook offers cautious optimism.
The bank has since projected real GDP growth to rebound to 3.8 percent in 2026, driven by recovery in agriculture, renewed momentum in tourism and emerging mining investments.
Last month, a World Bank analysis faulted the country’s poor economic management which it said is undermining Malawi’s fight against extreme poverty, with the country ranked among 43 nations where poverty levels are expected to stagnate or worsen in the coming decades.
The International Monetary Fund had also indicated that Malawi’s economy was losing ground to its regional peers as reform momentum stalls, inflation persists and public debt mounts.
Malawi is aspiring to transform into a lower middle-income economy by 2030 and an upper middle-income economy by 2063. However, the economic growth rate averaging 1.8 percent is not sufficient to foster development in a country with an annual population growth rate of 2.7 percent.
Mzuzu University economics lecturer Chistopher Mbukwa earlier observed that the rising poverty levels is an indication that all efforts in the form of development strategies, programmes and projects that the country has been implementing have not succeeded.
National Planning Commission (NPC) also conceded that Malawi’s ambition to become a middle-income economy by 2063 is being undermined by a widening mismatch between economic growth and rapid population expansion.
