Malawi’s economic recovery remains fragile because economic growth is failing to keep pace with population growth, while repeated climate disasters, global crises and foreign exchange shortages continue to undermine production, investment and living standards, Oxfam in Malawi has warned.
In its analysis of macroeconomic shocks and government expenditure, the organisation identifies weak economic growth, declining per capita income, climate-related production losses and falling investment as key challenges to recovery.
Oxfam in Malawi’s analysis shows that real gross domestic product (GDP) growth averaged 2.9 percent between 2015 and 2024, peaking at 5.7 percent in 2019. In the past three years, growth has fallen below two percent annually, trailing population growth of 2.7 percent and contributing to declining per capita income.
The findings point to an economy struggling to generate sufficient growth to improve living standards, with successive crises compounding existing structural weaknesses.
The analysis traces these pressures to shocks including the Covid-19 pandemic, the Russia-Ukraine war, the cholera outbreak and tropical cyclones, which have disrupted economic activity and increased pressure on public expenditure.
Climate disasters have inflicted particularly heavy losses. Cyclone Freddy caused damage and losses estimated at $505 million, while production losses in 2023 were equivalent to 0.5 percent of real GDP.
The 2023/24 drought further exposed Malawi’s vulnerability to weather-related shocks, contributing to a 21 percent decline in cereal production to 3.8 million metric tonnes. Maize output fell to 2.7 million tonnes, against estimated national requirements of between 3.3 million and 3.5 million tonnes.
Oxfam in Malawi also highlights persistent foreign exchange shortages as a constraint on industrial and service sector activity. Gross investment declined from 16.3 percent of GDP in 2022 to 12.8 percent in 2024, pointing to further difficulties in sustaining economic expansion.
The findings underscore the need to address both immediate economic pressures and deeper structural vulnerabilities. Malawi’s dependence on rain-fed agriculture leaves production, food security and export earnings exposed to climate shocks, while foreign exchange shortages constrain businesses’ access to imported inputs.
The possibility of another El Niño adds to these concerns, with potential disruptions to rainfall threatening agricultural output, food security and inflation. The Department of Climate Change and Meteorological Services has warned that Malawi could experience another El Niño this year.
Centre for Social Concern economic governance officer Agnes Nyirongo said the country’s dependence on agriculture for food, employment and export earnings makes climate shocks a major threat to economic stability.
“Increased investment in irrigation, climate-smart agriculture, economic diversification and disaster preparedness would be critical to protecting long-term growth ambitions,” she said.
Meanwhile, Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha said in the 2026/27 National Budget Statement that investments in agriculture, tourism, mining, manufacturing and small-and-medium enterprises would support economic growth.
