Malawi’s path to economic recovery faces fresh headwinds as the World Bank warns of a global economic slowdown that could weigh heavily on developing countries.
According to the June 2025 Global Economic Prospects report released on Tuesday, global growth is expected to slow to just 2.3 percent in 2025—the weakest pace since the 2008 global financial crisis.
However, the report has excluded outright recessions despite painting a gloomy outlook.
It indicates that this economic downturn is being driven by rising trade tensions, declining business confidence, and tight global financial conditions.
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“After being buffeted by a series of adverse shocks over 2020-24, the global economy is facing another significant headwind this year, with increased trade barriers and heightened policy uncertainty leading to a notable deterioration of the outlook relative to January,” states the report
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The World Bank’s warning comes at a time Malawi’s economy has faced a series of setbacks in recent years, including climate disasters, persisting high inflation at 29.2 percent, and fiscal challenges.
Sub-Saharan Africa is projected to grow by 3.7 percent in 2025—far below the rate needed to reduce poverty and keep pace with population growth.
The World Bank warns that low-income and fragile economies like Malawi will struggle to create enough jobs, close income gaps, and reduce poverty.
It is urging governments, especially in developing economies, to take bold steps to restore economic stability by restoring fiscal space and addressing barriers to investment and job creation.
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“Emerging market and developing economies (EMDEs) central banks face a balancing act between addressing domestic inflation pressures and cushioning external headwinds to growth,” it adds
The report further stresses the need to address debt vulnerabilities—a major concern for Malawi, which is already grappling with high debt levels now at over K16 trillion.
Economist Velli Nyirongo said the June report signals a tough outlook for Malawi, therefore relying on traditional sectors like tobacco and rain-fed agriculture will only expose the country to greater risks and missed opportunities.
“To build resilience, Malawi must continue to build its foreign exchange reserves by reducing leakages and ensuring export earnings are properly managed. Expanding capacity in the mining sector is also crucial,” Nyirongo said
While noting the importance of agriculture diversification, Nyirongo said investing in tourism and infrastructure will also help the country to diversify its economy and reduce its dependence on one sector.
