Located in Southern Africa, Malawi is landlocked, sharing its borders with Mozambique, Zambia and Tanzania. The country has an estimated population of 18.6 million (2019), which is is expected to double by 2038.
Malawi remains one of the poorest countries in the world despite making significant economic and structural reforms to sustain economic growth. The economy is heavily dependent on agriculture, employing nearly 80% of the population, and it is vulnerable to external shocks, particularly climatic shocks.
The Malawi Growth and Development Strategy (MGDS), a series of five-year plans, guides the country’s development. The current MGDS III, Building a Productive, Competitive and Resilient Nation, will run through 2022 and focuses on education, energy, agriculture, health and tourism. The process is underway to develop a successor plan of Vision 2020, the country’s long-term development plan.
Malawi is a generally peaceful country and has had stable governments since independence in 1964. One-party rule ended in 1993; since then multi-party presidential and parliamentary elections have been held every five years.
Malawi’s sixth tripartite elections were conducted in May 2019. The presidential results were nullified in February 2020 by the Constitutional Court. New presidential elections were held on June 23, 2020 where Lazarus Chakwera of the Malawi Congress Party and Saulos Chilima of the United Transformational Movement Party (known as the UTM Party) were elected as president and vice president respectively after getting 58.6% of the votes. They won against Peter Mutharika of Democratic Progressive Party and United Democratic Front coalition, who received 39.4% of the votes. President Lazarus Chakwera and Vice President Saulos Chilima lead a coalition of nine political parties.
Malawi’s three-year pathway of fast economic growth has been interrupted by the COVID-19 (coronavirus) pandemic. The full extent of the pandemic’s negative impact is still uncertain as the crisis unfolds but the widespread impact of the COVID-19 crisis is expected to be felt in the fourth quarter and beyond, with reductions in tax revenue paired with increased expenditure on health and economic policy responses.
Malawi’s economy grew by 4.4% in 2019, a marked increase from 3.5% in 2018 supported by a rebound in agriculture production, as maize and key crops apart from tobacco increased. Real gross domestic product (GDP) growth for 2020 was projected in September 2019 at 4.8% due to an expectation of the second consecutive year of strong harvests, offset by continuing political uncertainty weighing on business activity and investment.
Revenue and grants totaled 10.3% of GDP through December 2019, below the target of 12.2% of GDP. Total expenditure and net lending were below budgeted levels as the government spent 0.9% of GDP below the mid-year target of 14.0%, due to under-spending on development expenditure which was partially offset by recurrent expenditure overruns of 0.6 percent of GDP.
Repeated high fiscal deficits have contributed to an accumulation of domestic debt such that the stock of domestic debt increased from 28.2 to 29.7% of GDP between 2018 and 2019.
Malawi has made progress in building its human capital—the knowledge, skills and health that people accumulate over their lives—in recent years. Life expectancy at birth is 63.7 years (2018 Population and Housing Census). The total fertility rate in 2015/16 was 4.4 children per woman down from 6.7 in 1992. Self-reported literacy (reading and writing in any language) is 71.6 for males and 65.9 for females (15+ years of age).
However, poverty and inequality remain stubbornly high. The latest poverty figures show the national poverty rate increased slightly from 50.7% in 2010 to 51.5% in 2016, but extreme national poverty decreased from 24.5% in 2010/11 to 20.1 in 2016/17. Poverty is driven by low productivity in the agriculture sector, limited opportunities in non-farm activities, volatile economic growth, rapid population growth, and limited coverage of safety net programs and targeting challenges.
Malawi’s development challenges are multi-pronged, including vulnerability to external shocks such as weather and health. The COVID-19 pandemic has further negatively impacted economic growth. Other challenges include rapid population growth and environmental degradation. Energy shortages still stand out, with about 11.4% of the population having access to electricity. Infrastructure development, the manufacturing base, and adoption of new technology are low, and corruption levels remain high with Transparency International ranking Malawi at 123/180 economies in 2019.
Last Updated: Jul 31, 2020