Malawi flag Malawi: Economic and Political Overview

The economic context of Malawi

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Compared to other countries, Malawi's economy proved to be resilient to the Covid-19 crisis, mainly thanks to the dominant role played by the agricultural sector. Nevertheless, after a tepid rebound in 2021, Malawi’s economy entered another slowdown in 2022, when GDP grew an estimated 0.9% due to external shocks (particularly the global impacts of the Russia-Ukraine war) and a worsening balance-of-payments crisis caused by sustained fiscal and external imbalances. Economic growth is likely to be below the regional growth rate in 2023: the IMF forecasts a 2.5% growth rate for the year driven by a better agricultural season and a gradual recovery in the services and industry sectors, followed by a slight acceleration to 3.2% in 2024.

Malawi's financial situation deteriorated due to the Covid-19 pandemic, as the balance of payment and fiscal needs increased in the midst of declining revenues. In response to the health crisis, the authorities adopted measures including strengthening the health care system, stepping up social spending, ensuring food security, and easing liquidity constraints in the banking system (IMF). According to the World Bank, the fiscal deficit reached 8.8% of GDP in FY2021/22, up from 8% one year earlier, while the public debt was estimated to have reached 73.3% of GDP by the end of 2022 (IMF). The country has a heavy interest burden and almost a third of domestic revenue will be needed for interest expenditure alone in FY2022/23. Meanwhile, in November 2022, the Executive Board of the IMF approved a disbursement of USD 88.327 million under the Food Shock Window of the Rapid Credit Facility to help Malawi address urgent balance of payment needs related to the global food crisis. Moreover, Malawi’s balance of payment worsened over the course of 2022, with foreign exchange widely unavailable: gross foreign exchange reserves decreased from USD 847 million in December 2019 to USD 326 million in October 2022, roughly covering 1.3 months of imports, much lower than the recommended adequacy level of 3.9 months of import coverage for a credit-constrained economy (World Bank). The inflation rate spiked over the course of 2022, driven by high global prices of food commodities and energy, coupled with the 25% devaluation of the national currency in May 2022 that amplified the impact of the elevated international prices. The IMF estimated the inflation rate at 18.4% in 2022, with a marginal decrease projected for 2023 (16.5%) and 2024 (12.6%), well above the Central Bank’s target range (3 to 7%). In the long term, President Chakwera’s Malawi Vision 2063 programme aims for the country to reach upper-middle income status by 2063 by investing in physical and human capital (IMF).

In Malawi, poverty has been increasing in rural areas where 85% of the population lives, compared to urban areas where it fell significantly from 25% to 17%. While no reliable figures are available for the unemployment rate, the World Bank estimates that over half of the Malawian population (50.7%) lives in poverty, with one of the lowest GDP per capita (PPP) in the world, estimated at USD 1,588 in 2022 (IMF). Other challenges include addressing scarce skilled human resources, providing healthcare, and managing population growth. The country has made progress in combating AIDS, although 10% of the population is HIV-positive.

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 12.5413.1811.0411.3111.79
GDP (Constant Prices, Annual % Change)
GDP per Capita (USD) 567580472470477
General Government Gross Debt (in % of GDP) 75.278.677.477.475.5
Inflation Rate (%) n/a27.719.812.28.1
Current Account (billions USD) -0.42-0.77-0.94-1.03-0.85
Current Account (in % of GDP) -3.4-5.9-8.5-9.1-7.2

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

With about 80% of the population living in rural areas, the economy of Malawi is predominately agricultural: the primary sector is estimated to account for 22.7% GDP, 80% of export revenues and 76% of employment (World Bank, latest data available). The main export and most cultivated crop is tobacco, while other revenue-generating crops include corn (maize), tea, coffee, sugarcane, cotton, sorghum, and potatoes. Historically, the country produces enough food to feed its population, though harvests can be seriously affected by adverse weather conditions, like it was the case in 2015 and 2016 with El Nino-induced droughts. As an example, Malawi's maize output - the major food crop - decreased by 18.9% in the 2021/22 farming year (to 3.7 million metric tonnes) due to drought, tropical cyclones and a lack of subsidized fertilizer. In 2022, the total agricultural output decreased by 1% and seasonal production estimates indicate that Malawian farmers harvested 5% less maize and 37% less tobacco than the average for the three preceding seasons (World Bank).

Though still underdeveloped, the industrial sector contributes an estimated 18.4% of GDP, employing only 5% of the workforce. Though still underdeveloped, the industrial sector contributes an estimated 18.5% of GDP in 2020. The majority of Malawi's industrial activity comes from manufacturing and food processing. Despite the government’s efforts to boost competitiveness, several challenges kept hindering the sector, including poor business climate, a lack of well-developed infrastructure, and the shortage of skilled labour to operate machinery. Mining activities are at a small-scale level, since Malawi has no oil or precious metals (except for ruby). However, the country has some deposits of bauxite, asbestos, graphite, and uranium. The latest estimates by the Reserve Bank of Malawi (RBM) show that the manufacturing sector expanded by 4.7% in 2022, whereas the mining and quarrying sector grew an estimated 4.6%, mainly on account of anticipated resumption of uranium mining at the Kayelekera Uranium Mine.

The services sector is the major contributor to the economy, accounting for more than half of GDP (52.4%). The main activities include tourism, health services, the banking sector, telecommunications, and retail, with the government of Malawi holding significant shares in most of these sectors. The tertiary sector employs 18% of the workforce. Tourism is considered a priority economic sector in the country’s long term development plan “Malawi Vision 2063”: prior to the COVID-19 pandemic, the sector accounted for more than 525,000 jobs, representing almost 7% of overall employment. After plummeting due to the pandemic, tourist arrival numbers recovered in 2022: in the first seven months of the year, the number of tourists increased by 62.7% compared to the same period one year earlier (to 722,133 – data National Bureau of Statistics).

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 61.9 8.1 30.0
Value Added (in % of GDP) 21.8 18.3 54.9
Value Added (Annual % Change) -1.0 0.9 1.8

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.


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Indicator of Economic Freedom


The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

World Rank:
Regional Rank:

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation


Country Risk

See the country risk analysis provided by Coface.

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Sources of General Economic Information

List of Malawi's Ministries
Statistical Office
National Statistical Office of Malawi
Central Bank
Reserve Bank of Malawi
Stock Exchange
Malawi Stock Exchange
Economic Portals

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Latest Update: December 2023