Economic Studies


Population 19.2 million
GDP per capita 326 US$
Country risk assessment
Business Climate
Change country
Compare countries
You've already selected this country.
0 country selected
Clear all
Add a country
Add a country
Add a country
Add a country


major macro economic indicators

  2016 2017 2018 (e) 2019 (f)
GDP growth (%) 2.3 4.0 3.3 3.8
Inflation (yearly average, %) 21.7 12.2 9.2 8.4
Budget balance (% GDP)* -7.3 -7.3 -3.9 -2.4
Current account balance (% GDP) -13.6 -9.5 -9.3 -8.1
Public debt (% GDP) 60.3 59.2 57.8 57.6

(e): Estimate. (f): Forecast. * Last fiscal year from July 1, 2018 to June 30, 2019.


  • Natural resources (uranium, tea, coffee, tobacco)
  • Rapidly expanding services sector
  • Resumption of support by financial donors (previously suspended due to corruption)
  • Member of the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA)


  • Economy dominated by agriculture, vulnerable to weather conditions
  • Food insecurity and geographical isolation
  • Infrastructure shortcomings (water, energy, transport, education, health)
  • Increase in extreme poverty
  • Diplomatic tensions with Tanzania and Mozambique


Growth driven by agriculture

Growth is expected to continue to increase in 2019, supported by agriculture, the sector that drives Malawian activity (30% of GDP). Although maize production contracted by 28% in 2018 due to drought and tobacco farms remain constrained by production quotas imposed in 2017 to support prices, the expansion of soybean, sugar, and tea crops should maintain the sector's positive contribution to overall activity, which therefore remains dependent on weather conditions. With nearly 76% of jobs in the sector, household consumption, boosted by higher incomes, should benefit from agriculture’s vibrant performance. Other sectors of activity, which have been hard hit by recurrent electricity shortages and blackouts, could increase slightly with the government's efforts to improve the supply of electricity (production will no longer be provided solely by inefficient hydroelectric facilities, but also by diesel-powered generators). The energy sector could attract foreign investment, as the government is planning a call for tenders for the construction of power lines linking Malawi and Mozambique, and talks are underway with the China Energy Engineering Corporation (CEEC) on the construction of a new coal-fired power plant. Private investment in other sectors could, however, be constrained by the period of uncertainty surrounding the 2019 general elections. Public investment, meanwhile, looks set to increase, in line with the third strategic plan for growth and development (2018/23), which includes improving access to safe drinking water and developing irrigation systems to stimulate agriculture. Although the government is expecting aid from international donors to resume, the high cost of the project (USD 12 billion, six times more than the central government budget), would extend its implementation beyond the planned time frame.

Inflation could slow as a result of prudent monetary policy coupled with a stable exchange rate and unchanged food prices.


Fiscal consolidation required under the new agreement with the IMF

The government deficit is expected to decline further due to increased fiscal consolidation efforts in line with the new USD 112.3 million Credit Facility granted by the IMF in April 2018. The government has committed itself to a more restrictive fiscal policy, including better allocation of expenditure, more efficient government, tax reforms and improved management of state-owned enterprises. Given the country's dependence on external financing (the external share of debt stands at 34%), this agreement opens up new opportunities for the Malawian economy, by restoring some confidence in the government among international donors and lenders, after their faith was shaken by high levels of corruption. Debt relief is expected to increase with the abandonment of non-concessional loans, which the authorities used when aid was cancelled (2013/16). Grants accounted for 3.5% of GDP in 2017.

The current account deficit looks likely to shrink again as a result of the reduction in the trade deficit. Exports, which consist of agricultural products, are expected to increase with production, while imports of food products are expected to decline. The balance of remittances from expatriates (6% of GDP in 2017) should remain stable and continue to provide the main positive contribution to the current account. Grants, concessional loans, and infrastructure-related FDI (2% of GDP in 2017) will finance the deficit. The gradual reduction in the deficit should ease the pressure on foreign exchange reserves, which remain low (three months of imports in 2017) and could decrease in order to maintain the national currency’s flexible peg to a basket of currencies.


A pre-election period marked by continuing corruption

The next general elections are planned for May 2019, when President Peter Mutharika will run for re-election. However, even as mistrust of institutions remains strong, corruption cases continue to emerge: in February 2017, a scandal forced the President to part with his Minister of Agriculture, George Chaponda, and, more recently, President Mutharika and his party, the DPP, were accused of receiving an illegal payment of USD 195,000 from a wealthy businessman. This was followed by the resignation of the party's Vice President, Saulos Chilima, who went on to create his own party, the UTM, to run against the current President in the elections. This latest scandal has eroded the President's political capital among a population frustrated by recurrent weak governance, repeated corruption scandals, endemic poverty and poor public services.

At the heart of tensions with Tanzania for more than 50 years, the division of Lake Nyasa/Malawi has been an especially sensitive issue since 2011, when Malawi issued oil and gas exploration licenses. In addition, illegal fishing in Lake Chiuta by Mozambican armed groups is poisoning relations with Mozambique.



Last update: February 2019