In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response
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 (Coface). After slowing down to 0.9% in 2020, GDP growth picked up to 2.2% in 2021, helped by a good harvest, and it is expected to further accelerate to 3.5% in 2022 and 4.5% in 2023 (IMF). Agricultural production and public investments will be the main drivers of growth (Coface).
Malawi's financial situation deteriorated due to the Covid-19 pandemic, as 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). Economic activity started to recover in 2021, but public finances worsened. Public deficit (including grants) increased from -6.6% GDP in 2020 to -7.4% GDP in 2021, and is expected to widen to -10.4% GDP in 2022 before decreasing to -9.5% GDP in 2023 (IMF). Investments under the Malawi III growth and development strategy, as well as agricultural subsidies, will weigh on expenditures (Coface). Public debt continued to increase, from 54.7% GDP in 2020 to 59.3% GDP in 2021, and is expected to soar to 65.4% GDP in 2022 and 69.5% GDP in 2023 (IMF). Malawi’s large current account deficit is putting pressure on foreign exchange reserves, which represent less than six weeks of imports, leaving the economy vulnerable to shocks (Coface). The IMF expressed concerns over Malawi’s high risk of overall and external public debt distress. The depreciation of the Malawian kwacha (more than 6% in 2021) and increases in prices for fuel, fertilizers, and food pushed inflation up to 9.5% in 2021 (IMF). It is expected to remain high in 2022 (9%) and to decline to 6.9% in 2023 (IMF). The government's priority, outlined in the Covid-19 Socio-Economic Recovery Plan 2021-2023, is to support economic recovery while preserving macroeconomic stability. In the long term, President Chakwera’s Malawi Vision 2063 aims for the country to reach upper-middle income status by 2063 by investing in physical and human capital (IMF). Malawi has expressed its interest in a new Extended Credit Facility arrangement with the IMF, but progress towards an arrangement depend on strong commitment to an adjustment program as well as sizeable financing support from the international community and regional development banks (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%. Unemployment was around 6% in 2020 (World Bank). 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 | 2019 | 2020 | 2021 (e) | 2022 (e) | 2023 (e) |
---|---|---|---|---|---|
GDP (billions USD) | 11.03e | 11.85e | 12.15 | 12.01 | 11.83 |
GDP (Constant Prices, Annual % Change) | 5.4e | 0.9 | 2.2 | 3.0 | 4.5 |
GDP per Capita (USD) | 544e | 568e | 566 | 544 | 521 |
General Government Gross Debt (in % of GDP) | 45.3 | 54.7 | 59.3 | 65.4 | 69.5 |
Inflation Rate (%) | 9.4 | 8.6 | 9.5 | 9.0 | 6.9 |
Current Account (billions USD) | -1.31 | -1.68 | -1.92 | -1.82 | -1.79 |
Current Account (in % of GDP) | -11.9 | -14.2 | -15.8 | -15.1 | -15.1 |
Source: IMF – World Economic Outlook Database , October 2021
Note: (e) Estimated Data
With about 80% of the population living in rural areas, the economy of Malawi is predominately agricultural: in 2020, the sector accounted for 22.7% of GDP, 80% of export revenues and 76% of employment (World Bank). The main export and most cultivated crop is tobacco - this, in a context where the country is looking to diversify its economy. Aside from tobacco, other revenue-generating crops include tea, coffee, sugarcane, cotton, sorghum, potatoes and corn (maize). 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.
Though still underdeveloped, the industrial sector contributed 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 lack of skilled labour to operate machinery. Mining activities are at a small-scale level, since Malawi has no precious metals or oil (except for ruby). However, the country has some deposits of bauxite, asbestos, graphite, and uranium. The industrial sector only employs 5% of the workforce.
The services sector is the major contributor to the country’s GDP (52.6% in 2020). 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 sector employs 18% of the workforce. In 2020, due to the COVID-19 pandemic, the service sector collapsed, declining by 6% (Coface). The agricultural sector proved more resilient, expanding by 0.5%, but was nonetheless hurt by lower cotton prices, supply chain disruptions and the decline in tobacco prices and production (Coface). In 2021, the recovery was driven by a rebound in agricultural production.
Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
---|---|---|---|
Employment By Sector (in % of Total Employment) | 76.4 | 5.4 | 18.3 |
Value Added (in % of GDP) | 21.1 | 17.2 | 55.6 |
Value Added (Annual % Change) | 3.0 | 1.2 | -0.3 |
Source: World Bank - Latest available data.
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Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
---|---|---|---|---|---|
Malawi Kwacha (MWK) - Average Annual Exchange Rate For 1 MUR | 20.08 | 21.18 | 21.58 | 21.01 | 19.05 |
Source: World Bank - Latest available data.
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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.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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Malawi is relatively open to international trade, which represents 66.6% of the country’s GDP (World Bank). 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. The average applied tariff rate is 4.2%. Malawi mainly exports raw tobacco (52.5% of total exports), sugar, tea, leguminous, nuts and machinery. Imports are led by refined petroleum (7.2% of total imports), fertilizers, medicines, tobacco and vehicles.
The main export destinations of Malawi in 2020 were Belgium, South Africa, the United Kingdom, Kenya, the United States, Zimbabwe, China and Tanzania. The top import origins were South Africa, China, the United Arab Emirates, India, the United Kingdom and Zambia. (Comtrade).
Malawi’s trade balance is structurally in deficit. In 2019, trade deficit (including services) reached USD 2.03 billion. In 2020, imports of goods reached USD 2.82 billion, while the country exported goods for a value of USD 767 million. The export of services generated USD 162 million while the import of services bill amounted to USD 275 million (WTO). In 2022, the trade deficit is expected to narrow only marginally, as increased agricultural exports will be partly offset by rising imports and the depreciation of the Malawian kwacha (Coface).
Foreign Trade Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
---|---|---|---|---|---|
Imports of Goods (million USD) | 2,425 | 2,547 | 2,706 | 2,941 | 2,820 |
Exports of Goods (million USD) | 1,017 | 884 | 880 | 913 | 767 |
Imports of Services (million USD) | 245 | 301 | 302 | 337 | 275 |
Exports of Services (million USD) | 94 | 130 | 160 | 175 | 162 |
Trade Balance (million USD) | -1,090 | -1,577 | -1,658 | -1,857 | n/a |
Trade Balance (Including Service) (million USD) | -1,225 | -1,728 | -1,812 | -2,033 | n/a |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
Main Customers (% of Exports) |
2020 |
---|---|
Belgium | 20.8% |
South Africa | 6.2% |
United Kingdom | 6.0% |
Kenya | 5.1% |
United States | 4.6% |
See More Countries | 57.3% |
Main Suppliers (% of Imports) |
2020 |
---|---|
South Africa | 20.6% |
China | 16.2% |
United Arab Emirates | 10.1% |
India | 7.7% |
United Kingdom | 4.6% |
See More Countries | 40.9% |
Source: Comtrade, Latest Available Data
Source: Comtrade, Latest Available Data
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Source: United Nations Statistics Division, Latest Available Data
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.).
Source: World Press Freedom Index, Reporters Without Borders
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.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal monetary and macroeconomic) taken by the Malawian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Malawi in the IMF’s Policy Tracker platform.
There are no specific import or export restrictions in Malawi related to COVID-19 so far For future possible up-to-date information please visit the website of the Malawian Ministry of Industry and Trade.
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Latest Update: April 2022