Malawi flag Malawi: Economic outline

Economic Outline

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, 2016

Note: (e) Estimated Data

Monetary Indicators 20162017201820192020
Malawi Kwacha (MWK) - Average Annual Exchange Rate For 1 ZAR 48.5354.9055.2551.8045.50

Source: World Bank, 2015


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Latest Update: December 2023