Malawi’s economy may be showing signs of stabilisation, but an economist says the current growth rate is too low to make a meaningful difference to the lives of ordinary Malawians.
Economic expert and International Trade Council Board Member Paul Kwengwere said real GDP growth of 2.8 percent, against population growth of 2.6 percent, leaves little improvement in income per person.
“In development economics terms, this trajectory fails to reduce poverty because it does not generate enough employment, absorb rural-to-urban labour shifts, or create real household surplus,” Kwengwere said.
The World Bank’s 23rd Malawi Economic Monitor, Building Stability to Unlock Growth, projects economic growth of 2.7 percent in 2026.
The report says the pace of growth remains too weak to deliver significant improvements in living standards. While overall poverty has fallen from 50.7 percent to 47.3 percent, food poverty has increased from 20 percent to 24 percent, while inequality has also widened.
Kwengwere said Malawi now needs to move beyond stabilising the economy and focus on structural transformation.
He said the country should target annual economic growth of between five and seven percent, driven by productive sectors that can create jobs, raise incomes and expand exports.
He identified commercial agriculture and agribusiness, manufacturing and other high-value export sectors as key areas for investment.
He also called for public resources to be shifted from recurrent expenditure towards productive infrastructure such as irrigation, energy generation and transport corridors.
The World Bank has identified restoring macroeconomic stability, creating a dynamic private sector, improving service delivery and resilience, and strengthening critical infrastructure as key areas for reform.
Balancing reforms with growth
Finance Minister Joseph Mwanamvekha said at the launch of the report in Lilongwe that the economy was beginning to stabilise.
He said inflation had eased to 20 percent in August 2026, while food inflation had fallen from 33.7 percent to 13.4 percent. GDP growth had also improved from 2.5 percent in August 2025 to 2.8 percent in August 2026.
But Kwengwere warned that poorly timed reforms could put further pressure on businesses and slow investment.
“Sudden implementation of cost-reflective tariffs for utility SOEs such as ESCOM or Water Boards increases operational costs for manufacturers, agribusinesses, and small enterprises, squeezing profit margins and depressing private sector investment in the short run,” he said.
He proposed a phased approach, starting with restructuring State-Owned Enterprises, strengthening audits, closing leakages and improving corporate governance.
This would be followed by gradual tariff adjustments and increased investment in productive infrastructure. In the longer term, he said private operators should be allowed to participate more actively in sectors such as energy and water where viable.
Mwanamvekha said government was negotiating with the IMF to restore an Extended Credit Facility programme but insisted that reforms would be designed around Malawi’s own priorities.
“We want to have homegrown policies and the IMF should just be providing a supporting role,” he said.
Kwengwere said stabilisation alone would not be enough to transform the economy.
“Stability is necessary but not sufficient,” he said. “Without a deliberate shift toward commercial agriculture, manufacturing, and capital formation, Malawi risks remaining trapped in a cycle of low growth and persistent poverty.”
