Analysis: Malawi’s Economy Struggled in 2024, but Recovery Expected in 2025/2026

Malawi’s economy faced a difficult year in 2024, with high inflation, forex shortages, and poor agricultural output taking a heavy toll on businesses and households. According to the Annual Economic Report 2025, the economy grew by only 1.8%, a slowdown largely caused by the El Niño weather phenomenon, which devastated agricultural production.

The hardest-hit sector was agriculture, which saw maize production fall by 22.7%, groundnuts by 40.7%, and soya beans by 35.6%. With maize being Malawi’s staple food, this decline led to higher food prices and worsened inflation, which averaged 32.2% throughout the year.

The economic slowdown was felt in all corners of the country. The cost of living soared, with fuel, transport, and essential goods becoming increasingly expensive due to forex shortages. Many businesses struggled to import raw materials, forcing some to scale down operations or close altogether.

Despite these challenges, the Annual Economic Report 2025 projects a rebound in 2025, with growth expected to rise to 3.2%. The government has prioritized investments in agriculture, with a focus on irrigation farming, mega-farms, and loans through the National Economic Empowerment Fund (NEEF) to support farmers.

Additionally, the 2025 general elections are expected to boost demand in sectors like transport, construction, and communication, helping businesses generate more revenue.

Key Sectors Expected to Improve in 2025

📌 Agriculture: Expected to recover as irrigation and commercialization efforts take effect, with projected growth of 0.3% in 2025 and 5.0% in 2026.

📌 Mining: The sector grew by 4.8% in 2024 and is set to expand further with key projects such as Kayelekera Uranium Mine and the Songwe Rare Earth Project, which will bring in forex and create jobs.

📌 Construction: The sector is forecast to grow by 6.2% in 2025, driven by government infrastructure projects and election-related activities.

📌 Tourism & Hospitality: With elections bringing in more visitors and investments in tourism, growth is expected to reach 8.6% in 2025.

📌 Wholesale and Retail Trade: After contracting in 2024, this sector is expected to recover with 4.7% growth in 2025, thanks to improved forex availability.

Inflation and Forex Shortages Remain a Concern

Although inflation is expected to drop to 24.0% in 2025 and 17.0% in 2026, it remains a major concern for Malawians, who continue to struggle with high food and transport costs. The government has implemented monetary policy measures, including raising the policy rate to 26.0%, to help control inflation.

Forex shortages also continue to hamper imports and industrial production, with the country’s current account deficit worsening to USD 2.079 billion in 2024. However, expected growth in mining and agricultural exports in 2025 could ease forex pressures.

Challenges That Need Urgent Attention

Despite the hopeful projections, Malawi still faces several economic challenges that must be addressed for sustainable growth:

🔴 Forex Shortages – The country continues to struggle with inadequate foreign currency reserves, making it difficult to import essential goods.

🔴 High Cost of Living – Inflation is still high, affecting purchasing power for many Malawians.

🔴 Infrastructure Deficits – Poor roads, unreliable electricity, and limited water supply hinder business growth.

🔴 Illegal Mining and Smuggling – Unregulated mining activities deprive the government of revenue and hurt the formal mining sector.

Is Economic Recovery on the Horizon?

As 2024 comes to an end, Malawi stands at a crossroads. The Annual Economic Report 2025 suggests that while economic challenges persist, there is hope for recovery. If agricultural production improves, mining expands, and forex reserves stabilize, Malawians could start to see a gradual improvement in their economic situation.

For now, the road to recovery remains challenging, but with the right policies and investments, Malawi could be on a path to economic stability in the coming years.

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