Estudios Económicos


Population 19.7 million
GDP 350 US$
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major macro economic indicators

  2017 2018 2019 (e) 2020 (f)
GDP growth (%) 4.0 3.3 3.8 0.5
Inflation (yearly average, %) 11.3 9.2 9.3 8.6
Budget balance (% GDP) -4.8 -7.8 -6.4 -5.2
Current account balance (% GDP) -11.3 -10.9 -10.0 -9.3
Public debt (% GDP) 57.7 59.6 63.0 62.3

(e): Estimate. (f): Forecast. * Last fiscal year from July 1, 2019 to June 30, 2020.


  • 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; highly affected by climate change
  • Food insecurity and geographical isolation
  • Increase in extreme poverty (70% of the 2019 population)
  • Infrastructure shortcomings (water, energy, transport, education, health) and weak business environment
  • Widespread corruption (120/180 according to Transparency International’s Corruption Perception Index)
  • Diplomatic tensions with Tanzania and Mozambique


Agriculture is the engine of growth

The economy is expected to further expand in 2020, led by agriculture, which is the driving force behind Malawi’s economy (30% of GDP). Corn production increased in 2019 due to favourable weather conditions. Tobacco production remains constrained by production quotas introduced in 2017 to support prices and by declining global demand. The development of soybean, sugar and tea crops will maintain the sector’s positive contribution to overall activity, which thus remains reliant on weather conditions. Agriculture also receives the lion’s share of international aid, which aims, among other things, to increase the use of fertilisers and high-yield crop varieties. As the sector employs nearly 70% of the population, household consumption is expected to be boosted by rising incomes. Other sectors are being severely affected by recurrent power shortages and outages, but are expected to grow as a result of investments, mainly from abroad, to improve energy supply. For instance, the Mozambique-Malawi Regional Interconnection Project, financed by the World Bank, includes the construction of a high-voltage power transmission line between the two countries that will provide reliable power to Malawian businesses and households. This is a crucial issue, since only 10% of the population has access to electricity. In addition, numerous investments in agro-industry, coupled with the growth of agricultural production, will develop this activity. In particular, the European Investment Bank has opened a €100 million private sector credit programme for agro-business projects. Construction should get support from efforts to rebuild infrastructure destroyed by Cyclone Idai in March 2019. Nevertheless, if it persists, the political stalemate that resulted from the elections will put a damper on growth.

Inflation could moderate thanks to prudent monetary policy and exchange rate stability. It remains driven by rising food prices.


Consolidation of public and external accounts

The government deficit is expected to narrow as fiscal consolidation is stepped up in exchange for the three-year USD 145.3 million Extended Credit Facility granted by the IMF in April 2018. The government has committed itself to a more restrictive policy, including better allocation of expenses, more efficient administration, tax reforms and improved management of state-owned enterprises. These measures will help strengthen the confidence of international donors and lenders, which has been shaken by rampant corruption, and open up prospects for grants and concessional loans. Grants represent about 7% of revenues. Improving confidence is also key to ensuring sustainable financing of the public deficit. The suspension of aid in 2013-16 forced the government to take out non-concessional loans, leading to an increase in (domestic) public debt. Debt should decrease as this method of financing is discontinued.

The trade deficit is expected to narrow as exports of agricultural products (tea, soybeans and sugar) increase with rising production. Imports are expected to ease because of the decline in oil prices. Conversely, they are likely to be maintained by the capital equipment needs resulting from development projects and reconstruction following the cyclone. Remittances by expatriate workers (6% of GDP) will remain the main positive contribution to the current account. The current account deficit is financed by project grants, concessional borrowing and FDI (infrastructure, services and industry). Its gradual reduction will alleviate the pressure on foreign exchange reserves, which represented three months of imports in 2018.


President Mutharika controversially re-elected

The May 2019 general elections, of which the results were delayed by a court decision due to voting irregularities, saw President Peter Mutharika win re-election. His Democratic Progressive Party (DPP) won 62 seats out of 193 in Parliament. The opposition, however, is challenging the victory and calling for the results of the election to be overturned. Moreover, corruption cases during Mr Mutharika’s previous term in office have left the President with damaged credibility, compounding the suspicions of fraud: in February 2017, a scandal forced Mr Mutharika to part with his minister of agriculture, while during the 2019 election campaign, the DPP was accused of receiving an illegal USD 200,000 payment from a wealthy businessman. The post-election climate therefore remains tense, marked by demonstrations and public dissatisfaction with recurrent governance deficiencies, repeated corruption scandals, endemic poverty and poor public services.

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



Last update: February 2020

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