Resources
Malawi
Key Facts
- Capital: Lilongwe
- Region: Southern Africa
- Population (2020): 19.13 million
- Official languages: English
- Independence Day: July 06, 1964
- Area: 118,484 sq km
- REC membership: COMESA, SADC
- Country classification: Developing country, Commodity exporter
- WTO membership: May 31, 1995
- Currency: Kwacha
Key statistics 2020
- GDP: US$12.18 billion
- GDP growth (annual %): 0.9%*
- Merchandise trade (% of GDP) : 29.4%
- Intra-African trade in Africa, 2019 (Percentage of total trade): 32%*
- Foreign direct investment, net inflows (BoP, current US$): US$45.24 million
- Current account balance (% GDP): -12.2%*
Sources: World Bank DataBank, *African Development Bank Statistics
Economic overview
GDP growth increased to 3.9% in 2021 amid the third wave of COVID-19, from 0.9% in 2020. Growth in 2021 was driven by agriculture (6.3%), wholesale (2%), accommodation (1.3%), financial services (4.8%), and transport services (3.1%). Manufacturing (0.6%), mining (1.1%), electricity (1.1%), and construction (1.1%) all saw contractions. Implementation of the COVID-19 Socio-economic Recovery Plan 2021–2023 is underway. Monetary policy remained relatively easy with the key policy rate at 12% during the year to November 2021. Inflation was 9.3% in 2021, up from 8.8% in 2020 on account of higher fuel prices but lower food inflation. The Malawian kwacha averaged 747 against the dollar in 2020 but depreciated to MWK 821.5 at end-October 2021.
The current account deficit widened from 12.2% to 13.1% of GDP in 2020 and 2021 due to falling exports. Official reserves stood at 1.4 months of imports in December 2021, underpinned by tobacco exports and the SDR allocation of $133 million, which is expected to increase gross reserves to 1.5 months of imports in 2022.
Economic growth is projected at 2.8% in 2022 and 4.0% in 2023. Prospects for improvement are anchored on stronger agriculture growth; COVID-19 containment and a successful vaccination program; and a recovery in tourism, exports, FDI, and public investment. Monetary policy is expected to remain accommodative. The current account deficit is projected to improve from 13.9% of GDP in 2022 to 9.3% of GDP in 2023, on the back of exports. Downside risks relate to persistence of COVID-19, weather shocks, rising public debt, and a worsening fiscal deficit. The public debt-to-GDP ratio will widen from 59.2% in 2021 to 64.3% in 2022, moving to crowd out the private sector. Inflation will remain relatively high at 11% in 2022 due to oil price increases before falling somewhat to 9.2% in 2023. Gross official reserves will improve to 1.5 months of imports in 2022 and 2023. Malawi is diversifying its exports towards minerals to mitigate the external sector shocks.
Last updated: May 2022
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