The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) says the business environment remains difficult for the private sector due to persistent macroeconomic imbalances driven by low productivity. In its 2025 Economic and Business Review, MCCCI says weak productivity has led to low revenues, declining exports, a negative balance of payments and limited job creation, increasing pressure on social spending. The report states: “The economy is caught in a cycle where increased social expenditures coincide with reduced government revenue, complicating the ability of both government and the private sector to perform their roles effectively.” Data show that in the first-half of the fiscal year, total revenue amounted to K2.383 trillion, below the projected K2.711 trillion, while expenditure reached K4.420 trillion.
This resulted in a deficit of K2.037 trillion against a planned K1.534 trillion. The deficit was largely driven by recurrent expenditure, which totalled K3.502 trillion in the first-half, crowding out development spending. MCCCI says the dominance of recurrent outlays—mainly wages, pensions, interest payments and subsidies—continues to weaken the growth-enhancing role of fiscal policy.
Meanwhile, the MCCCI Business Climate Survey shows most firms are operating below capacity. About 51.9 percent reported utilisation below 50 percent, 37 percent between 50 and 75 percent, and only 11.1 percent above 75 percent. Foreign exchange shortages were cited as the biggest constraint, with 74.1 percent ranking it among their top three challenges.
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Inflation followed at 70.4 percent, rising input costs at 55.6 percent, policy uncertainty at 29.6 percent and high interest rates at 22.2 percent. Only 3.7 percent of respondents said they were not affected by forex shortages, while 63 percent said they were severely and frequently affected. Minister of Industrialisation, Business, Tourism and Trade George Partridge earlier said declining capacity utilisation was not surprising given the unsatisfactory business environment.
He said government was prioritising immediate interventions while developing medium- and long-term measures to improve the operating environment. Partridge said improving productivity would increase supply and help ease inflationary pressures. Meanwhile, real gross domestic product is projected to grow by 2.7 percent in 2025, slightly lower than the earlier forecast of 2.8 percent. The revision reflects weaker performance in manufacturing (1.8 percent), wholesale and retail trade (0.1 percent), mining and quarrying (5.3 percent) and transport and storage (3 percent).
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