The report says decisive and coordinated reforms are essential to restore macroeconomic stability, unlock export‑led growth and generate jobs for the country’s rapidly expanding labour force.
With an estimated 270 000 young people entering Malawi’s labour market annually but only about 40 000 formal jobs created each year, the World Bank warns that joblessness is becoming an urgent national challenge.
Real gross domestic product (GDP) growth is projected at just 1.9% in 2025, well below the pace of population growth, marking the fourth consecutive year of contracting GDP per capita.
Fiscal deficits remain among the highest in Sub‑Saharan Africa, while interest payments consume almost half of domestic revenues. Public debt stands at close to 90% of GDP, leaving Malawi in external debt distress. Inflation also remains elevated due to food prices and large fiscal deficits, while rising public debt continues to crowd out private‑sector credit.
The report’s special focus, “Reversing Malawi’s Export Decline”, identifies severe competitiveness issues. High and unpredictable trade costs, complex licensing processes that can take weeks, frequent import and export bans and slow border procedures have discouraged investment and reduced the number of exporting firms. Distortions in the foreign exchange market and persistent shortages have added to uncertainty.
As a result, goods exports as a share of GDP have fallen since 2014, export diversification has stalled, and firms have increasingly shifted to informality and smuggling.
Tobacco remains dominant, with new opportunities in macadamia, soybeans, groundnuts and mining constrained by policy inconsistency and weak infrastructure.
World Bank Country Manager Firas Raad said Malawi has the potential to turn the tide if it acts swiftly. Simplifying trade procedures, improving border efficiency and creating predictable policies could unlock investment in agro‑processing and manufacturing.
The report recommends stronger fiscal discipline, increased domestic revenue, progress on debt restructuring, resolving foreign exchange imbalances and repurposing agricultural subsidies. It also calls for decentralised service delivery, improved electricity access and targeted reforms to expand trade and attract private investment.
–WorldBankGroup/ChannelAfrica–
