Economic growth in Malawi fell short of expectations in 2023 and is projected to remain subdued in 2024. While implementation of planned macroeconomic and structural reforms is expected to boost Gross Domestic Product (GDP) growth over the medium term, an El Niño-induced drought has worsened the near-term growth outlook. Addressing Malawi’s difficult economic situation requires a combination of immediate emergency-response efforts and the implementation of structural reform. However, downside risks continue to dominate the outlook. The impact of climate-related shocks during the current El Niño year could be larger than anticipated, while fiscal slippages, delays in debt restructuring, or the slow implementation of public financial management reforms could further increase macro-fiscal instability. The continued lack of foreign-exchange availability could result in shortages of critical imports, which would reduce economic activity. At the end of 2023, the government reached an agreement with the IMF on a four-year program under the Extended Credit Facility (ECF), and the resumption of budget support from the World Bank and African Development Bank will support important reforms designed to accelerate long-term growth. These achievements have bolstered confidence in the reform process, but success is far from assured. Rebalancing the economy and enabling faster, more inclusive growth, while strengthening resilience against shocks will require accelerating reform efforts. This nineteenth edition of the Malawi Economic Monitor (MEM) outlines urgent policy measures required to stabilize the economy, protect vulnerable households, and enhance long-term growth.
Authors
- Citation
- “ World Bank . 2024 . Malawi Economic Monitor, July 2024: Reforming with Urgency - Malawi's Path to Economic Stability . © Washington, DC: World Bank . http://hdl.handle.net/10986/41931 License: CC BY-NC 3.0 IGO . ”
- Collection(s)
- Economic Updates and Modeling
- DOI
- https://doi.org/10.1596/41931
- Identifier externaldocumentum
- 34365830
- Identifier internaldocumentum
- 34365830
- Pages
- 52
- Published in
- United States of America
- Region country
- Malawi
- Report
- 192610
- Rights
- CC BY-NC 3.0 IGO
- Rights Holder
- World Bank
- Rights URI
- https://creativecommons.org/licenses/by-nc/3.0/igo
- UNIT
- EFI-AFR1-MTI-MacroFiscal-1 (EAEM1)
- URI
- https://hdl.handle.net/10986/41931
- date disclosure
- 2024-07-23
- region administrative
- Africa Eastern and Southern (AFE)
- theme
- Inclusive Growth,Job Creation,Data Development and Capacity Building,Economic Policy,Economic Growth and Planning,Fiscal Policy,Private Sector Development,Public Sector Management,Monetary and Credit Policies,Fiscal sustainability,Jobs,Data production, accessibility and use,Macroeconomic & Structural Policy Modelling,Macro-financial policies,Structural Transformation and Economic Diversification
Files
Table of Contents
- Acknowledgements 7
- Abbreviations 8
- Overview 9
- 1 Economic Developments 16
- 1.1 Global and Regional Context 17
- Global growth conditions have remained steady despite challenges 17
- 1.2 Recent Economic Developments 19
- Economic growth failed to meet expectations in 2023 and will likely remain subdued in 2024 19
- Foreign-exchange inflows continue to fall short of demand 24
- Inflation has moderated slightly, but risks remain elevated 27
- Persistent fiscal slippages jeopardize Malawi’s economic recovery 28
- Debt sustainability hinges on successful restructuring and fiscal adjustment 31
- The exchange-rate spread has narrowed following the devaluation, but planned reforms to increase flexibility have yet to be fully implemented 32
- Monetary tightening has been insufficient to contain inflationary pressures 33
- The financial sector remains stable, with commercial banks reporting a very strong performance in 2023 33
- 1.3 Medium-Term Economic Outlook 35
- Policy Priorities: restoring macroeconomic stability, protecting vulnerable households against shocks, and increasing production and exports 36
- 2 Malawi’s Social Protection System Adapts to Mounting Risks 38
- Introduction 39
- Social Protection in Malawi: An Expanding and Innovative System Able to Respond to Shocks 40
- The Social Protection System and Infrastructure 42
- Social Protection as an Adaptive Crisis Response Tool 45
- The Future of Adaptive Social Protection in Malawi: Scalable Safety Nets 46
- Building on a Strong Foundation: The Future of Malawi’s Shock-Responsive Social Protection System 47
- APPENDIX AMacroeconomic Indicators 50
- References 51
