Malawi risks reversing gains made towards taming the inflation rate in the face of the escalating joint US-Israel war on Iran which is driving up global oil prices and raising fuel supply risks.
In a brief published by the United Nations Resident Coordinator’s Office in Lilongwe, the UN said the shock could quickly hit through fuel, fertiliser and trade channels, thereby exposing structural weaknesses in an already fragile economy.
Malawi enters the crisis with thin buffers as foreign exchange reserves stand at about 0.5 months of import cover, public debt hovering above 90 percent of gross domestic product (GDP) and full dependence on imported fuel and fertiliser.
The brief contrasts with the Reserve Bank of Malawi (RBM) report which stated that inflation is easing after headline inflation fell to 24.9 percent in January 2026 from 27.7 percent in the previous quarter, largely due to improved food supply.
But the central bank warned that rising non-food inflation, driven by fuel and electricity costs, and higher global oil prices could “adversely affect the domestic economy”.
Economists say the disinflation trend remains fragile and largely food-driven, leaving it vulnerable to external shocks.
The brief projects that inflation could surge to between 32 and 35 percent in the short term as higher fuel and freight costs feed into transport and food prices, reinforcing pressure on the exchange rate and import costs.
Foreign exchange is the critical pressure point and a 15 percent rise in global oil prices would add $6-8 million monthly to Malawi’s fuel import bill, further straining reserves and risking disruptions to essential imports.
“Malawi imports 100 percent of its petroleum products… any increase in global crude prices translates directly into higher kwacha-denominated pump prices,” the brief states.
Shipping disruptions are compounding the risk, with vessels rerouted via the Cape of Good Hope adding up to two weeks in transit time and increasing freight costs on fuel, medicines and food.
Food security risks are rising as the brief warns fertiliser supply disruptions could significantly affect the 2026/27 harvest, particularly during the October-December planting window, potentially pushing food insecurity to 30-40 percent of the population.
Economics Association of Malawi president Bertha Bangara-Chikadza said the crisis exposes deep structural vulnerabilities, describing Malawi as “one of the most exposed economies in the Sadc region”.
She said the reinstatement of the Automatic Pricing Mechanism (APM), which pushed petrol and diesel prices up by over 40 percent, has widened price gaps with neighbouring countries, creating arbitrage risks that could worsen local shortages.
In a separate interview, Mzuzu University economist Christopher Mbukwa said foreign exchange shortages remain the biggest threat.
“The major risk is forex scarcity… even without global conflict, this is where Malawi struggles most,” he said.
Economist Milward Tobias warned that rising oil prices will deepen pressure on the exchange rate and reserves.
“We need more forex to import the same fuel, which weakens the kwacha and raises import costs,” he said, adding that higher pump prices will ripple across transport, production and food prices.
In a statement on March 24, the Malawi Energy Regulatory Authority (Mera) said the country has adequate fuel stocks in transit and in storage, attributing intermittent shortages to logistical delays.
Mera also warned against panic buying, saying it could worsen supply pressures.
