Economic and Political Overview

flag Malawi Malawi: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

Despite implementing substantial economic and structural reforms aimed at sustaining growth, Malawi remains one of the world’s poorest countries. Its economy is heavily reliant on agriculture, which provides employment for two-thirds of the population, making it highly vulnerable to external shocks, especially those related to climate. Over the past three years, per capita income has declined as economic growth has consistently lagged behind population growth. Frequent climatic disasters and other external shocks have deepened the country’s challenges, limiting the ability of poor households to build resilience. In 2023, real GDP grew by just 1.6% year-on-year, constrained by limited access to inputs due to foreign exchange shortages and the effects of Tropical Cyclone Freddy. In 2024, the economy continued to face serious difficulties, with real GDP growth slowing to 1.8% amid a severe drought and persistent foreign exchange constraints. Real GDP is projected to grow modestly by 2% in 2025, supported by a partial recovery in the agricultural sector. However, growth in the industrial and services sectors is expected to remain subdued due to ongoing foreign exchange shortages, which continue to limit the import of production inputs. In 2026, GDP growth is forecast at 2.4% (World Bank).

Government expenditure consistently outpaced revenue growth, leading to a rising fiscal deficit in recent years. Fiscal revenues rose by 0.6 percentage points to 16.8% of GDP in 2023, supported by strong tax revenue performance and increased grant disbursements from development partners. Despite this, Malawi recorded the highest fiscal deficit in sub-Saharan Africa at 10.2% of GDP, driven by fiscal slippages and the recapitalisation of the Reserve Bank of Malawi to offset exchange rate losses. After narrowing to 7.7% in 2024, the fiscal deficit is projected to widen again to 8.7% of GDP in 2025, largely due to increased election-related spending and the need to cover critical expenditures previously funded by the United States. After increasing in recent years, public debt declined to an estimated 84.5% in 2024, from 91.3% one year earlier. Nevertheless, according to Coface, Malawi is in default with its external bilateral creditors, mainly India and China, as well as commercial lenders like the Trade & Development Bank and Afreximbank. It requires USD 986 million in debt relief by 2027—about 7% of GDP. While bilateral restructuring commitments have been secured and talks with commercial creditors are ongoing, over 60% of Malawi’s external debt is multilateral and not subject to restructuring. According to official figures, Malawi’s average annual inflation rate reached 32.2% in 2024, up from 28.8% in 2023. In the short term, inflation is expected to ease only slightly due to a weak agricultural recovery, new import bans limiting supply, and continued high money supply growth.

The World Bank estimated the unemployment rate at 5% in 2024, but the vast majority of earners in Malawi participate in the informal economy. Moreover, the combination of external imbalances, high inflation, and fiscal constraints has deepened economic vulnerabilities and hindered recovery, with the poverty rate rising to 71.2% in 2024. The country has one of the lowest GDP per capita (PPP) in the world, estimated at USD 1,713 in 2024 (IMF). Other challenges include addressing scarce skilled human resources, providing healthcare, and managing population growth.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 12.6710.8410.7811.0611.61
GDP (Constant Prices, Annual % Change) 1.51.84.04.34.5
GDP per Capita (USD) 558464448447456
General Government Gross Debt (in % of GDP) 91.384.582.378.774.8
Inflation Rate (%) 28.830.615.38.66.8
Current Account (billions USD) -2.07-1.51-1.48-1.33-1.43
Current Account (in % of GDP) -16.3-13.9-13.8-12.0-12.3

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

With about 80% of the population living in rural areas, the economy of Malawi is predominantly agricultural: the primary sector is estimated to account for 30.4% of GDP, 80% of export revenues, and 61.7% of employment (World Bank, latest data available). The main export and most cultivated crop is tobacco (which represents around 40% of total exports), 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, as was the case in 2015, 2016, and 2024 with El Niño-induced droughts. Based on FAO estimates, maize import requirements for the 2024/25 marketing year (April/March) are expected to be higher than usual due to the poor 2024 harvest. Imports will likely come from outside the subregion, as the El Niño-induced drought in 2024 caused production declines across Southern Africa, reducing the availability of exportable surpluses within the subregion.

Though still underdeveloped, the industrial sector contributes an estimated 15.3% of GDP, employing a mere 8% of the workforce. The majority of Malawi's industrial activity comes from manufacturing and food processing. Despite the government’s efforts to boost competitiveness, several challenges keep hindering the sector, including a poor business climate, a lack of well-developed infrastructure, and a shortage of skilled labour to operate machinery. Mining activities are at a small-scale level (1% of GDP), as Malawi has no oil or precious metals (except for ruby). However, the country has some deposits of bauxite, asbestos, graphite, and uranium. Malawi's industrial production saw a year-on-year decrease of 14% in 2024 amid foreign exchange scarcity that induced production cuts. All manufacturing sub-sectors saw declines, except for the production of beverages, tobacco products, and rubber and plastics, which grew by 2.4%, 14.9%, and 21.5%, respectively. The manufacturing sector's output fell by 9.3%, while utilities experienced a significant decline of 38.2%.

The services sector is the major contributor to the economy, accounting for more than half of GDP (47.5%) and 30.3% of employment. 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. 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, in 2024/25, travel & tourism contributed 6.7% of GDP, as per the National Budget. Malawi's banking sector, overseen by the Reserve Bank of Malawi (RBM), is generally stable. However, only 25% of the adult population utilizes banking services. The sector comprises eight commercial banks, with the National Bank of Malawi and Standard Bank of Malawi dominating, holding a combined market share of 46% for total assets and 47% for total deposits. They also represent 56% of total loans and 58% of total equity capital (U.S. Trade Administration).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 61.7 8.0 30.3
Value Added (in % of GDP) 30.4 15.3 47.5
Value Added (Annual % Change) 0.7 2.5 1.8

Source: World Bank - Latest available data.

 

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Monetary Indicators 20162017201820192020
Malawi Kwacha (MWK) - Average Annual Exchange Rate For 1 MUR 20.0821.1821.5821.0119.05

Source: World Bank - Latest available data.

 
 

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Indicator of Economic Freedom

Definition:

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.

Score:
53/100
World Rank:
145
Regional Rank:
33

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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Foreign Trade in Figures

Malawi is relatively open to international trade: the country is a member of the WTO and has bilateral trade agreements with two of its main trade partners, South Africa and Zimbabwe. Malawi is also a beneficiary of the African Growth and Opportunity Act (AGOA), a U.S. trade preference program. As part of its trade policy, the country has been gradually reducing protections granted to domestic trade by shifting its sources of revenue from customs duties to consumption and direct taxes. Overall, Malawi's economy remains heavily dependent on agriculture, and its exports and imports reflect this reliance on primary and intermediate goods: tobacco accounts for almost half of total exports, as the country is one of the world's largest producers of tobacco. Other major exports include groundnuts, tea, dried vegetables, and agricultural products in general. Imports are led by refined petroleum (18.6% of total imports in 2023), fertilizers, clothing, and medicaments (data Comtrade).

According to the latest data available by Comtrade, the main export destinations of Malawi in 2023 were Belgium (15.9%), Tanzania (10.8%), China (5.6%), South Africa (5.4%), and Zimbabwe (5.3%); whereas the top import origins were China (17.4%), South Africa (15.6%), the United Arab Emirates (12.4%), India (7.0%), Tanzania (6.7%), and Zambia (4.1%).

Malawi’s trade balance is structurally in deficit. In 2023, imports of goods declined by 1.6% to USD 1.56 billion, while the country exported goods for a value of around USD 880 million (-2.2% – data WTO).  Concerning services, imports stood at USD 550 million against USD 398 million in exports. According to preliminary figures from the NSO, the trade deficit widened to 6.3% of GDP in 2024, as it reached USD 2,31 billion (from 2.17 billion one year earlier). Total imports of goods and services surged to USD 3.26 billion throughout the year, with exports falling short of the one billion mark (927 million).

 
Foreign Trade Indicators 20192020202120222023
Imports of Goods (million USD) 2,8922,6783,0731,5861,560
Exports of Goods (million USD) 8997711,009900880
Imports of Services (million USD) 4595845911,330n/a
Exports of Services (million USD) 373442462417n/a
Trade Balance (million USD) -1,733-1,919-2,048-1,845-1,945
Trade Balance (Including Service) (million USD) -1,819-2,065-2,181-2,347-2,469

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2023
Belgium 15.9%
Tanzania 10.8%
China 5.6%
South Africa 5.4%
Zimbabwe 5.3%
See More Countries 56.9%
Main Suppliers
(% of Imports)
2023
China 17.4%
South Africa 15.6%
United Arab Emirates 12.4%
India 7.0%
Tanzania 6.7%
See More Countries 40.9%

Source: Comtrade, Latest Available Data

 
 

Main Products

1.0 bn USD of products exported in 2023
Unmanufactured tobacco; tobacco refuseUnmanufactured tobacco; tobacco refuse 46.3%
Tea, whether or not flavouredTea, whether or not flavoured 7.3%
Dried leguminous vegetables, shelled, whether or...Dried leguminous vegetables, shelled, whether or not skinned or split 7.1%
Groundnuts, whether or not shelled or broken (excl...Groundnuts, whether or not shelled or broken (excl. roasted or otherwise cooked) 5.6%
Oilcake and other solid residues, whether or not...Oilcake and other solid residues, whether or not ground or in the form of pellets, resulting from the extraction of soya-bean oil 5.1%
See More Products 28.6%
3.1 bn USD of products imported in 2023
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 18.6%
Mineral or chemical nitrogenous fertilisers (excl....Mineral or chemical nitrogenous fertilisers (excl. those in pellet or similar forms, or in packages with a gross weight of <= 10 kg) 5.5%
Mineral or chemical fertilisers containing two or...Mineral or chemical fertilisers containing two or three of the fertilising elements nitrogen, phosphorus and potassium; other fertilisers (excl. pure animal or vegetable fertilisers or mineral or chemical nitrogenous, phosphatic or potassic fertilisers); animal, vegetable, mineral or chemical fertilisers in tablets or similar forms or in packages of a gross weight of <= 10 kg 4.8%
Unused postage, revenue or similar stamps of...Unused postage, revenue or similar stamps of current or new issue in the country in which they have, or will have, a recognised face value; stamp-impressed paper; banknotes; cheque forms; stock, share or bond certificates and similar documents of title 3.5%
Worn clothing and clothing accessories, blankets...Worn clothing and clothing accessories, blankets and travelling rugs, household linen and articles for interior furnishing, of all types of textile materials, incl. all types of footwear and headgear, showing signs of appreciable wear and presented in bulk or in bales, sacks or similar packings (excl. carpets, other floor coverings and tapestries) 3.2%
See More Products 64.4%

Source: Comtrade, Latest Available Data

 
 

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Sources of General Economic Information

Ministries
List of Malawi's Ministries
Ministry of Finance and Economic Affairs
Ministry of Trade and Industry
Ministry of Mining
Statistical Office
National Statistical Office of Malawi
Central Bank
Reserve Bank of Malawi
Stock Exchange
Malawi Stock Exchange
Search Engines
Google Malawi
Biz Malawi
Economic Portals

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Political Outline

Current Political Leaders
President: Lazarus Chakwera (since 28 June 2020)
Vice President: Saulos Chilima (since 3 February 2020)
Next Election Dates
Presidential Election: June 2025
National Assembly: September 2025
Main Political Parties

Malawi is a multi-party democracy. The main political parties include:

Malawi Congress Party (MCP): centre-right; rooted in African nationalism and conservatism
Democratic Progressive Party (DPP): centre; liberal, with a focus on anti-corruption
United Transformation Movement (UTM): centre to centre-right; liberal, emphasising reform and transformation
United Democratic Front (UDF): centre; liberal, historically strong in the southern region
People's Party (PP): centre-right; conservative, founded by former President Joyce Banda
Alliance for Democracy (AFORD): centre-left; social democratic, advocating for democratic reforms.

Type of State
Malawi is a presidential republic.
Executive Power
The executive power is exercised by the government. The President of Malawi, elected by universal suffrage for a five-year term, is both head of state and head of government. The President appoints the Cabinet, whose members may be drawn from within or outside the National Assembly.

Alongside the President, a Vice-President is elected on the same ticket. The President may also appoint a second Vice-President, who must be from a different political party.
Legislative Power
Legislative power is vested in the Parliament, which, under the Constitution, consists of two chambers: the National Assembly and the Senate. The National Assembly has 193 members, elected for five-year terms in single-member constituencies. The Senate, originally intended to have 80 seats representing traditional leaders, geographical districts, and special interest groups (such as women, people with disabilities, and youth), has never been established.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
62/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Partly Free
Political Freedom:
3/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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Latest Update: May 2025