By Benadetta Chiwanda Mia:
Malawi’s narrow money supply (M1), a key indicator of liquidity in the economy, soared to a record K3.78 trillion in June 2025, statistics from Trading Economics show.
This represents a 12.1 percent increase from May’s K3.37 trillion.
M1, which includes cash in circulation and demand deposits, reflects funds that are readily available for spending in the economy.
Statistics show that Malawi’s M1 averaged around K227 billion between 1975 and 2025, with an all-time low of K56 billion recorded in February 1976.
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Over the past decade, the growth has been substantial.
In 2016, for instance, M1 stood at about K395.87 billion.
Economist Velli Nyirongo described the sharp rise as a sign of heightened liquidity, likely fuelled by increased government spending, banking sector expansion and rising household deposits.
“At its core, the expansion of liquidity reflects a situation where money is circulating faster than goods and services are being produced.
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“This imbalance has been fueling inflation, which has already climbed to extremely high levels,” Nyirongo said.
He said high inflation was eroding the value of wages and savings, leaving many Malawians struggling to meet basic needs.
On the fiscal side, Nyirongo warned that inflation was compounding government challenges.
He said rising commodity prices have increased the cost of public service delivery while weakening of the Kwacha has made debt repayments— especially foreign currency-denominated ones—expensive.
“The incoming government inherits a delicate situation where policy credibility is under strain, and without careful management, fiscal imbalances could worsen,” he said.
