Malawi Revises 2025 Growth Projections Amidst Inflation-Driven Protests

Malawi’s government has lowered its 2025 growth forecast to 3.2 percent due to rising inflation, inciting protests from street vendors and jobless youths. Inflation is currently at 28.5 percent, severely impacting the economy. The government plans to tackle these issues by boosting production in key sectors and combating foreign currency shortages.

Malawi’s government has revised its economic growth forecast for 2025, reducing it to 3.2 percent from a previous estimate of 4.0 percent, amidst growing public discontent over inflation. Protests have erupted in major cities, primarily led by street vendors who accuse the government of mismanaging inflation rates that have reached double digits, threatening their livelihoods.

Demonstrations have expanded from the capital, Lilongwe, to Blantyre, the country’s commercial hub, drawing support from unemployed youths frustrated with President Lazarus Chakwera’s administration. Finance Minister Simplex Chithyola Banda acknowledged in his recent budget presentation that inflation stood at 28.5 percent year-on-year in January, significantly driven by foreign exchange shortages affecting the import of essential goods such as fuel and fertilizer.

In response to these challenges, Minister Banda noted that the government aims to alleviate foreign exchange shortages by enhancing production in key sectors including agriculture, tourism, and mining. He announced plans to establish a national anti-crime unit to combat the burgeoning black market for foreign currency, which has exacerbated the economic situation.

The fiscal budget deficit for the current fiscal year is projected at 9.6 percent of the gross domestic product (GDP), with a forecasted deficit of 9.5 percent for the subsequent year. Additionally, public debt was approximately 86 percent of GDP as of September 2024, with the government engaged in ongoing efforts to conclude debt-restructuring negotiations, having previously achieved agreements with official bilateral creditors.

In summation, Malawi’s economic outlook for 2025 has been downgraded due to escalating inflation, which has incited widespread protests among citizens, particularly street vendors and unemployed youths. The government is exploring measures to stimulate growth and address currency shortages, while also planning to undertake debt restructuring. These developments highlight the pressing economic challenges faced by the nation.

Original Source: www.thecitizen.co.tz