Malawi has revised its economic growth forecast for 2025 downward to 3.2% from 4.0%, citing rising inflation, forex shortages, and growing public unrest, Finance Minister Simplex Chithyola Banda announced during the annual budget speech.
The economic downturn has been exacerbated by a severe drought, which has hurt agricultural output, a sector that forms the backbone of Malawi’s economy. Inflation surged to 28.5% in January, driven by foreign currency shortages that have disrupted imports of essential commodities, including fuel and fertilizer. The country’s GDP grew just 1.8% in 2024, a slowdown that has heightened public frustration.
Government Response: Debt Restructuring & Crackdown on Forex Black Market
To stabilize the economy, Banda outlined a series of reform measures aimed at increasing foreign exchange inflows through agriculture, tourism, and mining. Additionally, he announced the creation of a national anti-crime unit to combat the black-market trade in foreign currency, which has contributed to exchange rate volatility.
Malawi is also engaged in debt restructuring talks with bilateral creditors and has entered negotiations with commercial lenders in an attempt to manage a public debt burden that stood at 86% of GDP as of September 2024.
Widespread Protests Over Inflation & Living Costs
The economic crisis has triggered a wave of protests across major cities, led primarily by street vendors and unemployed youth, who accuse the government of failing to curb surging prices and worsening poverty levels.
Protests began in the capital, Lilongwe, and have since spread to Blantyre, Malawi’s second-largest city, with demonstrators demanding immediate government intervention to address inflation and economic hardship.
President Chakwera Blames Opposition for Economic Turmoil
Amid mounting unrest, President Lazarus Chakwera has accused opposition forces of deliberately worsening inflation to destabilize his government.
“Investigations by our intelligence service have found that the current hyperinflation of prices is being done deliberately by some traders in collusion with one of the opposition parties… to make Malawians suffer so that this same party can use the pain being inflicted on innocent Malawians as a campaign tool,” Chakwera said in a public address.
He further warned that any attempts to manipulate economic conditions for political gain would not succeed.
“Your plot to overthrow my government through this means by instigating an illegal hyperinflation of prices will not succeed,” he declared.
The accusations have deepened political tensions in the country, as Malawi faces a critical period of economic instability and social unrest.
