The Economics Association of Malawi (Ecama) said yesterday that while fiscal slippage remains a concern, key indicators suggest government is on the right track. However, she said sustaining this momentum requires addressing pressing issues such as food inflation, foreign currency shortages and ensure fiscal discipline. Said Bangara Chikadza: “The reduction in panic and uncertainty is palpable and it is encouraging to see businesses and households responding to these positive signals.
“Crucially, fiscal slippage remains a concern. Controlling government expenditure and reducing crowding out of the private sector will be vital to maintaining development partner support and fostering structural shifts. If managed well, Malawi could be poised for a meaningful economic recovery.” This comes years after Malawi’s economic struggles with real gross domestic product (GDP) projected at about 2.8 percent in 2025, far below the six percent mark needed to have a dent on poverty levels, which currently stand at over 70 percent.
Inflation also remains high at 27.9 percent, up from 9.4 percent in 2019, thereby reducing household buying power and raising the cost of doing business. At the same time, persistent foreign exchange shortages are disrupting import-dependent industries, while heavy debt servicing—rising from K4.1 trillion in 2019 to K21.6 trillion now or nearly 90 percent of GDP—has squeezed government finances and limited investment in key development areas. In addition, the policy rate has risen sharply from 13.5 percent in 2019 to 26 percent, pushing up bank lending rates and making credit more expensive and harder to access for the private sector.
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Mutharika pointed out that inflation has declined, making savings safer and secure; fuel shortages are easing and power outages are shortening as the country moves closer to eliminating blackouts, which he said is inspiring confidence among potential investors. She added that if sustained, these developments could help rebuild confidence among investors, businesses and ordinary citizens, particularly by improving the reliability of essential services and protecting household savings. “At the three-month mark, the presidency has offered direction and reassurance, but confidence in recovery remains fragile. Sustained progress will depend on whether early gains are consolidated and whether policy measures translate into consistent improvements in food security, energy reliability, employment and the overall cost of living for ordinary Malawians.” Speaking separately, economist and former presidential candidate in the September 2025 General Election Milward Tobias warned that the easing of inflation and forex pressures are temporary, saying interventions that increase production of goods and services and generation of forex are what can sustainably stabilise and grow the economy.
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