Malawi’s economic crisis could persist beyond 2028, with key macroeconomic fundamentals largely remaining in the red, analyses by several global economic think-tanks suggest.
The think-tanks see a nearly static growth in gross domestic product (GDP) terms in the short to medium terms, with headline inflation expected to remain elevated, while the local unit— the Kwacha—facing a sharp collapse, and interest rates expected to spike.
Projections compiled in the Bridgepath Capital Malawi Monthly Economic Report for May 2026 draw on data from Oxford Economics, the Economist Intelligence Unit (EIU), African Development Bank (AfDB) and the World Bank.
Oxford Economics, for instance, forecasts Malawi’s real GDP growth at just 0.5 percent in 2026, the lowest compared to the rest.
It attributes the projection to the combined weight of global oil price shock and accelerating currency depreciation.
- Advertisement -
The projection is way lower than the 3.8 percent estimate for 2026 by the Ministry of Finance.
The EIU projects 2 percent growth for Malawi, while the AfDB and World Bank estimate that the GDP would grow by 2.3 and 2.4 percent, respectively.
In its Article IV consultation published recent, the IMF on the other hand said Malawi’s economy is at a critical juncture, ‘facing high inflation, an unsustainable fiscal and debt outlook, foreign exchange shortages, and fuel scarcity.’
It said stabilising the economy and implementing reforms to foster sustained and inclusive growth are critical to improving living conditions for Malawians.”
- Advertisement -
- Advertisement -
On the other side, Oxford Economics forecasts Malawi’s headline inflation to average 40.8 percent in 2026, citing fuel price increases and the pass-through effects of a depreciating kwacha, before easing only modestly to 33.9 percent in 2027.
The EIU projects 26 percent headline inflation for 2026, while the AfDB sees it at 24.6 percent. The World Bank projects inflation at 21.9 percent in 2026.
The exchange rate outlook may prove the most explosive element of all with Oxford Economics projecting that the kwacha will fall sharply to K2,444 per US dollar by end of 2026, weakening further to K2,927 by 2027 and K2,980 by 2028.
The EIU takes a more conservative view, projecting the rate to hold around K1,734 through 2026 before sliding to K2,007 in 2027.
Currently trading at K1,749 per dollar, the official rate has barely moved in over a year.
The IMF warned in June 2025 that the current account deficit had expanded to about 22 percent of GDP and gross reserves were critically low, pointing to an overvalued exchange rate, with the official-parallel spread wide and likely reflecting factors beyond fundamentals.
If Oxford Economics is right, a sharp and painful correction is coming, and ordinary Malawians will feel it immediately through higher fuel, food, and import prices.
Making matters worse, Oxford Economics projects the central bank policy rate will surge to 32 percent in 2026, up from the current 24 percent, pushing the cost of borrowing to levels that would further strangle private investment.
But more recently the reserve bank has taken a stance to maintain the policy rate at 24 percent which has culminated in borrowing interest rates marginally dropping.
Foreign exchange reserves are also moving in the wrong direction, declining to $571.6 million in March 2026 from $625.7 million in February 2026, representing just 2.1 months of import cover, according to the Bridgepath report.
The IMF’s 2025 Article IV staff report noted that impediments to macroeconomic stability and underlying fiscal dominance are not expected to be addressed under current policies, and that only under an illustrative reform scenario would these impediments be gradually addressed, resulting in higher growth and lower inflation.
But in a recent interview, Finance Minister Joseph Mwanamvekha pushed back against the gloomier projections, insisting the government’s numbers are built on solid ground. On global risks, Mwanamvekha said the government is watching every scenario closely.
“Our GDP growth and inflation projections are grounded on a number of macroeconomic, both exogenous and endogenous, factors including this year’s good crop production and heavy investment in agriculture, mining and infrastructure through the Constituency Development Fund and many other interventions that are in the 2026/27 budget
