By Mcloyd Chilangiza:
African Development Bank (AfDB) has projected that Malawi’s economic growth will remain modest over the next two years, falling below the government’s forecasts highlighted in the 2026-27 national budget.
According to the bank’s 2026 Africa’s Macroeconomic Performance and Outlook report released last week, Malawi’s real gross domestic product growth is projected to average about 2.9 percent between 2026 and 2027.
The projection is lower than the government’s forecast of 3.8 percent growth in 2026 and 4.9 percent in 2027.
The report attributes the modest outlook to persistent macroeconomic pressures— including high inflation, fiscal imbalances and foreign exchange shortages— that continue to constrain private sector activity and investment.
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Similarly, the International Monetary Fund has projected Malawi’s economic growth at 2.7 percent, which also shows that the country’s recovery could remain slow in the short term.
Slower economic growth means the economy is expanding at a limited pace, which can negatively affect the job creation agenda, slow business expansion and limit government revenue for public services and infrastructure development.
However, government projections, contained in the 2026 Annual Economic Report, indicate that improved agricultural performance and increased investment in mining and energy could support stronger expansion.
AfDB also projects Malawi’s inflation to average about 20 percent, slightly higher than the government’s forecast of 17.4 percent.
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“Malawi’s projected growth may remain below the continental average, suggesting the country could struggle to keep pace with [the] regional economic expansion [drive],” the report reads.
The bank recommends that Malawi strengthen fiscal discipline and domestic revenue mobilisation, improve productivity through investment in infrastructure and technology and diversify the economy beyond agriculture and raw commodity exports to support long-term economic transformation.
Economist Paul Kwengwere said the government’s growth expectations may be overly optimistic, given the country’s structural constraints.
He said Malawi needed to restructure public spending towards investments that enhance productivity.
Kwengwere said addressing structural challenges such as foreign exchange shortages and inefficient subsidies would be critical to achieving sustainable economic growth.
“Our projections are highly optimistic. The government’s 3.8 percent target assumes a best-case scenario without considering crowding out of the private sector due to foreign exchange problems.
“Dealing with foreign exchange challenges is critical. Eliminating the spread between the official and parallel markets is important because exporters continue to bypass formal channels, starving the economy of official foreign exchange reserves,” he said.
In the 2026-27 fiscal year, the government allocated K7.5 trillion to recurrent expenditure and K3.397 trillion to development expenditure, representing 69.1 percent and 30.9 percent, respectively.
Meanwhile, statistics from the National Statistical Office show that the country’s annual inflation rate eased to 24.1 percent in February 2026, the lowest level since July 2022, down from 24.9 percent in January, signaling a gradual easing in price pressures
