Malawi: Economy#
Landlocked Malawi ranks among the world's most densely populated and least developed countries. The country’s economic performance has historically been constrained by policy inconsistency, macroeconomic instability, limited connectivity to the region and the world, and poor health and education outcomes that limit labor productivity. The economy is predominately agricultural with about 80% of the population living in rural areas. Agriculture accounts for about one-third of GDP and 90% of export revenues. The performance of the tobacco sector is key to short-term growth as tobacco accounts for more than half of exports.The economy depends on substantial inflows of economic assistance from the IMF, the World Bank, and individual donor nations. In 2006, Malawi was approved for relief under the Heavily Indebted Poor Countries program. Between 2005 and 2009 Malawi’s government exhibited improved financial discipline under the guidance of Finance Minister Goodall GONDWE and signed a three-year IMF Poverty Reduction and Growth Facility worth $56 million. The government announced infrastructure projects that could yield improvements, such as a new oil pipeline for better fuel access, and the potential for a waterway link through Mozambican rivers to the ocean for better transportation options.
Since 2009, however, Malawi has experienced some setbacks, including a general shortage of foreign exchange, which has damaged its ability to pay for imports, and fuel shortages that hinder transportation and productivity. In October 2013, the African Development Bank, the IMF, several European countries, and the US indefinitely froze $150 million in direct budgetary support in response to a high level corruption scandal, called "Cashgate," citing a lack of trust in the government’s financial management system and civil service. Most of the frozen donor funds — which accounted for 40% of the budget — have been channeled through non-governmental organizations in the country. The government has failed to address barriers to investment such as unreliable power, water shortages, poor telecommunications infrastructure, and the high costs of services. Investment had fallen continuously for several years, but rose 4 percentage points in 2014 to 17% of GDP.
The government faces many challenges, including developing a market economy, improving educational facilities, addressing environmental problems, dealing with HIV/AIDS, and satisfying foreign donors on anti-corruption efforts.
Economic Facts#
| GDP (purchasing power parity) | $21.23 billion (2016 est.) $20.67 billion (2015 est.) $20.08 billion (2014 est.) note: data are in 2016 dollars |
|---|---|
| GDP (official exchange rate) | $5.474 billion (2015 est.) |
| GDP - real growth rate | 2.7% (2016 est.) 3% (2015 est.) 5.7% (2014 est.) |
| GDP - per capita (PPP) | $1,100 (2016 est.) $1,100 (2015 est.) $1,100 (2014 est.) note: data are in 2016 dollars |
| Gross national saving | -4.4% of GDP (2016 est.) 3% of GDP (2015 est.) 3.5% of GDP (2014 est.) |
| GDP - composition, by end use | household consumption: 75.1% government consumption: 17.4% investment in fixed capital: 11.9% investment in inventories: 2.6% exports of goods and services: 42.6% imports of goods and services: -49.6% (2016 est.) |
| GDP - composition, by sector of origin | agriculture: 32% industry: 17.5% services: 50.5% (2016 est.) |
| Agriculture - products | tobacco, sugarcane, cotton, tea, corn, potatoes, cassava (manioc, tapioca), sorghum, pulses, groundnuts, Macadamia nuts; cattle, goats |
| Industries | tobacco, tea, sugar, sawmill products, cement, consumer goods |
| Industrial production growth rate | 4% (2016 est.) |
| Labor force | 5.747 million (2007 est.) |
| Labor force - by occupation | agriculture: 90% industry and services: 10% (2003 est.) |
| Unemployment rate | NA% |
| Population below poverty line | 52.4% (2004 est.) |
| Household income or consumption by percentage share | lowest 10%: 3% highest 10%: 31.9% (2004) |
| Distribution of family income - Gini index | 39 (2004) |
| Budget | revenues: $1.03 billion expenditures: $1.247 billion (2016 est.) |
| Taxes and other revenues | 18.8% of GDP (2016 est.) |
| Budget surplus (+) or deficit (-) | -4% of GDP (2016 est.) |
| Public debt | 61.2% of GDP (2016 est.) 54.2% of GDP (2015 est.) |
| Fiscal year | 1 July - 30 June |
| Inflation rate (consumer prices) | 23.5% (2016 est.) 21.2% (2015 est.) |
| Central bank discount rate | 15% (31 December 2009) 15% (31 December 2008) |
| Commercial bank prime lending rate | 44.5% (31 December 2016 est.) 44.9% (31 December 2015 est.) |
| Stock of narrow money | $550.8 million (31 December 2016 est.) $512.3 million (31 December 2015 est.) |
| Stock of broad money | $1.481 billion (31 December 2014 est.) $1.2 billion (31 December 2013 est.) |
| Stock of domestic credit | $711.2 million (31 December 2016 est.) $724.5 million (31 December 2015 est.) |
| Market value of publicly traded shares | $753.6 million (31 December 2012 est.) $1.384 billion (31 December 2011 est.) $1.363 billion (31 December 2010 est.) |
| Current account balance | -$863 million (2016 est.) -$533 million (2015 est.) |
| Exports | $1.277 billion (2016 est.) $1.278 billion (2015 est.) |
| Exports - commodities | tobacco 53%, tea, sugar, cotton, coffee, peanuts, wood products, apparel (2010 est.) |
| Exports - partners | Belgium 15.8%, Zimbabwe 12%, India 6.9%, South Africa 6.2%, US 6%, Russia 5.6%, Germany 4.6% (2015) |
| Imports | $2.578 billion (2016 est.) $2.607 billion (2015 est.) |
| Imports - commodities | food, petroleum products, semi-manufactures, consumer goods, transportation equipment |
| Imports - partners | South Africa 26.4%, China 16.7%, India 12%, Zambia 10.3%, Tanzania 6% (2015) |
| Reserves of foreign exchange and gold | $605.9 million (31 December 2016 est.) $693.1 million (31 December 2015 est.) |
| Debt - external | $1.921 billion (31 December 2016 est.) $1.715 billion (31 December 2015 est.) |
| Stock of direct foreign investment - at home | $NA |
| Stock of direct foreign investment - abroad | $NA |
| Exchange rates | Malawian kwachas (MWK) per US dollar - 671.6 (2016 est.) 499.6 (2015 est.) 499.6 (2014 est.) 424.9 (2013 est.) 249.11 (2012 est.) |