African Development Bank (AfDB) Group says Malawi’s economic outlook remains positive despite downside risks.
In its 2025 African Economic Outlook launched on Tuesday, the bank projects real gross domestic product to rise to three percent in 2025 and 3.8 percent in 2026, driven by a recovery in agriculture and tourism, alongside gains from mining investments.
Reads the outlook in part: “On the demand side, growth will be bolstered by a rebound in exports and improved real incomes, supporting consumer spending and investment.
“Inflation is expected to decline to 23.8 percent by 2026, reflecting better food supply conditions.”
However, the group said key risks to the outlook include US reciprocal trade tariffs and aid cuts, delays in resolving the debt crisis and climate-related shocks, which could undermine fiscal stability, infrastructure investments and agricultural recovery.
“Addressing these risks will require accelerated structural reforms, strengthened fiscal discipline, and enhanced climate resilience measures to sustain the growth momentum,” said the bank.
AfDB group vice-president and chief economist Kevin Chika Urama observed that persistent inflationary pressures, high interest rates, debt service costs and debt refinancing risks, continued commodity dependence and price volatility in commodity markets, and increased climate shocks continue to pose headwinds to African economies.
He said: “And more recently, geopolitical tensions, trade policy uncertainty, regional conflicts and political instability have become more prominent.
“While these headwinds, including the recent escalation in trade tariffs illustrate the vulnerabilities inherent in over-reliance on foreign trade and global value chains, they also present opportunities for African countries to deepen intra-regional trade, strengthen economic diversification and regional economic integration, and deepen efforts in strengthening institutions, governance and rule of law.”
In recent years, the country registered a growth of 1.9 and 1.8 percent in 2023 and 2024 respectively, due to cyclones such as Freddy, and El-Nino weather-related conditions, which reduced agricultural production.
According to the data, economic growth has averaged 2.2 percent, far below the recommended 10.6 percent required to grow the economy to a lower-middle-income status by 2030, with a GDP per capita mark of about $1 086 (about K1.9 million) as envisaged in Malawi 2063, the country’s long-term development strategy.
Minister of Finance and Economic Affairs Simplex Chithyola-Banda conceded in the 2025/26 Budget Statement that since the current administration assumed office in 2020, it has been navigating through various economic turbulences.
“As such, the economic landscape has not evolved as anticipated, with persistent pressures on key indicators such as economic growth, exchange rates, inflation and structural shifts in trade and production,” he said.
