Malawi Economic Monitor : Turning the Corner - Special Topic : Healthy Watersheds for a Strong Economy (English)

Malawi's economy is estimated to have grown by only 1.6 percent in 2023. The resumption of energy production at the Kapichira hydroelectric power plant has improved access to electricity and supported economic activity, particularly in the industry and services sectors. However, production inputs across sectors were often unavailable throughout 2023 due to foreign exchange shortages, dampening growth. Following Cyclone Freddy, agricultural output in 2023 was only marginally larger than in 2022. Rapid inflation and foreign exchange shortages throughout the year contributed to a weak business environment, further undermining economic growth. Rapid price increases and limited employment options have led to a rise in food insecurity and poverty in Malawi. Over the past decade, increased government spending has pushed government financing requirements to unsustainable levels, but there is now a notable shift towards fiscal consolidation. Economic growth is projected to increase, driven by an improved macroeconomic environment and sustained structural reforms. Watersheds play a crucial role in sustaining the ecosystem, biodiversity, wildlife, agriculture, and human population by serving as the natural resource base for all forms of life.