Benadetta Chiwanda Mia:
The International Monetary Fund (IMF) has revised its global economic growth forecast for 2025 to 3.0 percent, slightly up from its April estimate.
The fund has, however, warned that the improvement is temporary and driven by short-term trade distortions rather than real fundamentals.
In its recent World Economic Outlook (WEO), the IMF cautioned that global growth remained below the pre-pandemic average of 3.7 percent, and risks to the outlook are “tilted to the downside”.
The forecast for 2025 is 0.2 percentage point higher than that in the reference forecast of the April 2025 WEO and 0.1 percentage points higher for 2026
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The July update highlighted ongoing trade tensions, geopolitical instability and rising fiscal vulnerabilities in major economies as key threats.
For sub-Saharan Africa, the IMF projects growth of 4.0 percent in 2025, rising modestly to 4.3 percent in 2026.
The region’s growth is expected to remain stable but insufficient to absorb rising population pressures and persistent development gaps.
It added that countries such as Malawi, with high debt levels, could face additional borrowing constraints.
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To address the uncertainty, IMF called on governments to implement policies that restore confidence and ensure sustainability, such as pursuing transparent trade frameworks and reducing policy-induced uncertainty.
“Restoring fiscal space and ensuring sustainable public debt is crucial, even while addressing critical spending needs. Central banks must carefully calibrate monetary policies to country-specific circumstances to maintain price and financial stability amid prolonged trade tensions and evolving tariffs,” it adds
Economist Velli Nyirongo said Malawi was likely to feel the impact of global economic trends outlined, given its heavy reliance on donor funding, imports and concessional borrowing.
“While there are signs of modest improvement in the global economic outlook, the overall environment remains volatile,” Nyirongo said.
He said donor countries themselves are under mounting pressure, as shifting geopolitical dynamics and changing domestic priorities in advanced economies were resulting in reductions in foreign aid.
