The Southern African nation of Malawi is landlocked sharing borders with Mozambique, Zambia and Tanzania, and an estimated population of 18 million (2016). Malawi has been able to make important economic and structural reforms and sustain its economic growth rates over the last decade. Nevertheless, poverty remains widespread, and the economy undiversified and vulnerable to external shocks. The country’s development is guided by a series of five-year growth and development strategies; the third strategy covering 2017-2022, focuses on education, energy, agriculture, health and tourism.
Malawi will hold its 6th tripartite elections on May 21, 2019. Current President Peter Mutharika was first elected in 2014 and will stand for re-election. Other major parties contesting for presidency are the Malawi Congress Party, United Democratic Front, and the United Transformation Movement led by current Vice President Saulos Chilima. Malawi is generally a peaceful country that has had stable governments since independence in 1964. One-party rule ended in 1993 and since then the country holds multi-party presidential and parliamentary elections every five years.
In 2018, Malawi’s real gross domestic product (GDP) is projected to moderate to 3.5% from 4% in 2017. This is due to lower output in agriculture caused by dry spells and fall armyworm infestation. Furthermore, performance in industry and service sectors was subdued because of erratic energy supply and a generally weak business environment. The FY2017/18 fiscal deficit widened from 4.8% the previous year to 7.3% of GDP. The deterioration was largely a result of lower than expected revenues and grants, securitization of payment arrears dating back to FY 2012/13 and expenditure associated with the bailout of a parastatal. Year-on-year headline inflation has receded to the Sub-Saharan Africa regional average rate standing at 9.3% in August 2018. Continued stability of the Kwacha relative to the US Dollar since 2017 has partly helped contain inflation in single digits. The Reserve Bank of Malawi has maintained a tight monetary stance with its policy rate standing at 16%.
Encouraging progress has been made in human development in recent years. Life expectancy is up to 64.2 years in 2018 (WHO) from 63.9 years in 2017. The total fertility rate is down to 4.4 children per woman from 6.7 between 1992-2015/16. Self-reported literacy (reading and writing in any language) is 81% percent for males and 66% for females (15+ years of age). However, poverty and inequality remain stubbornly high. National poverty rate has increased slightly from 50.7% in 2010 to 51.5 percent in 2016, but extreme national poverty has decreased from 24.5% in 2010/11 to 20.1 in 2016/17. Poverty is driven by poor performance of the agriculture sector, volatile economic growth, population growth, and limited opportunities in non-farm activities.
Malawi’s challenges are multi-pronged. Vulnerability to external shocks (e.g. weather, health) is a major challenge. The weather will remain a key part of the economic cycle, with the negative impact of bad weather compounded by factors such as population growth and environmental degradation. Shortage of energy still stands out with about 10% of the population having access to electricity. Infrastructure development, the manufacturing base, and adoption of technology are low. Corruption levels remain high with Transparency International ranking Malawi at 122/180 economies in 2017.
Last Updated: Oct 10, 2018