The World Bank’s January 2025 Economic Monitor for Malawi revised 2024 GDP growth downward to 1.8% — below the previous estimate of 2.0% and, critically, below population growth. In practical terms, this means average living standards contracted again in 2024.

What drove the downward revision

The revision reflects a combination of persistent macro pressures: high inflation, constrained foreign exchange availability, and limited private investment. The Malawi economy entered 2025 still carrying the weight of multiple consecutive shocks — the 2023 currency devaluation, drought, and the lingering effects of Cyclone Freddy’s 2023 destruction.

Inflation ran at 32.3% in 2024, up from 28.7% in 2023, despite a tighter monetary policy stance. The Reserve Bank held the policy rate at 26% throughout the period, prioritising inflation control over growth stimulus.

The monetary policy picture

At its January 29–30 meeting, the Monetary Policy Committee held the policy rate at 26%, with the Lombard rate at 20 basis points above that. The Liquidity Reserve Requirement remained at 10% for local currency deposits.

This is relevant for companies considering debt financing in Malawi: commercial lending rates sit well above 30% annually. Most foreign companies operating in Malawi fund local operations through parent company capital rather than local debt, and this is the right approach in the current environment.

The forex situation entering 2025

The Reserve Bank conducted two foreign exchange auctions in February 2025, raising a cumulative USD 0.25 million — a small figure that illustrates the structural forex scarcity the country has been managing. The official market selling price remained at approximately MK 1,751/USD entering 2025.

The informal market told a different story: the Kwacha traded at premiums that peaked at 150% above the official rate in March 2025, according to the IMF — the widest spread in recent years.

What this means for investment planning

An economy growing at 1.8% with 32% inflation and a 150% informal forex premium is a difficult operating environment. It is also one that rewards companies who understand it and plan around it.

The key practical points:

  • MWK cost bases will increase substantially in real terms year-on-year; financial models need to be built on this reality
  • Forex repatriation requires planning and the right banking relationships
  • The informal premium signals genuine USD scarcity; importing companies should not assume easy access to official rate forex

The 2025 projection of 3.0% growth — driven by agricultural recovery and mining investment — represents a genuine improvement, but starting from a weak 2024 base.

Sources: World Bank Malawi Economic Monitor January 2025, Bridgepath Capital Monthly Economic Report February 2025.