Key Business Points
- Invest in agriculture and tourism: The Malawi economy is expected to grow by 3 percent in 2025, driven by a recovery in these sectors.
- Monitor exchange rates and trade policies: The African Development Bank has highlighted the risk of US reciprocal trade tariffs and aid cuts, which could impact Malawi’s economy.
- Diversify and invest in local resources: With Properly sequenced reforms, Africa can mobilise an additional $1.43 trillion in domestic resources to accelerate inclusive and sustainable growth.
The African Development Bank (AfDB) has projected a 3 percent growth in Malawi’s economy in 2025, a 1.2 percentage points improvement from the 1.8 percent growth recorded last year. This growth is expected to be driven by a recovery in agriculture and tourism, alongside gains from mining investments. Agriculture is a key sector for Malawi’s economy, and its recovery is expected to boost growth. The bank also predicts that the economy could grow by 3.8 percent next year.
The growth will be bolstered by a rebound in exports and improved real incomes, supporting consumer spending and investment. According to AfDB, inflation is expected to decline to 23.8 percent by 2026, reflecting better food supply conditions. However, the bank notes that key risks to the outlook include United States reciprocal trade tariffs and aid cuts, delays in resolving the debt crisis, and climate-related shocks, which could undermine fiscal stability, infrastructure investments, and agricultural recovery.
The Reserve Bank of Malawi has trimmed GDP growth for 2025 from 4 percent to 3.2 percent, reflecting weak agricultural performance due to delayed rainfall and prolonged dry spells. This revision highlights the importance of monitoring weather conditions and their impact on the economy. Despite this, the AfDB remains optimistic about Malawi’s growth prospects, citing the potential for Africa to mobilise an additional $1.43 trillion in domestic resources to accelerate inclusive and sustainable growth.
As Malawi’s business community looks to the future, it’s essential to focus on diversification and investment in local resources. With the right reforms in place, the country can unlock significant growth opportunities and drive economic development. As the economy continues to evolve, businesses must stay abreast of changes in trade policies, exchange rates, and other factors that could impact their operations. By doing so, they can position themselves for success and contribute to Malawi’s growth and development. Mkaka kwa mkono (let’s support each other) in driving this growth and creating a thriving business environment.
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