Malawi’s government has lowered its growth forecast for 2025 from 4.0% to 3.2% amid rising inflation that has sparked widespread protests. Street vendors and unemployed youth are vocal against the government’s economic management, particularly regarding inflation, which reached 28.5% in January. The government plans to boost production in critical sectors and tackle foreign exchange shortages to stabilize the economy.
Malawi’s government has revised its economic growth forecast for 2025, announcing a decrease from 4.0 percent to 3.2 percent in its recent budget speech, as citizens express frustration over rising inflation. Protests have erupted in major cities, predominantly involving street vendors who claim that the government’s inability to manage double-digit inflation is threatening their livelihoods.
Demonstrations have spread from the capital, Lilongwe, to Blantyre, where jobless youths have joined the protests, criticizing President Lazarus Chakwera’s administration. According to Finance Minister Simplex Chithyola Banda, the national economic growth was severely affected by a drought last year, resulting in an estimated growth rate of only 1.8 percent.
Inflation reached 28.5 percent year-on-year in January, exacerbated by severe foreign exchange shortages that hampered imports of essential commodities including fuel and fertilizer. The government has proposed measures to alleviate forex shortages by enhancing production in key industries such as agriculture, tourism, and mining, and plans to establish a national anti-crime unit to combat currency black markets.
The fiscal deficit for the current budget year stands at 9.6 percent of the GDP, with a projection of 9.5 percent for the next year. Public debt currently amounts to approximately 86 percent of GDP, as the government aims to finalize debt restructuring negotiations. Banda stated, “Government in principle has reached agreements with all official bilateral creditors and is still negotiating with commercial creditors to restructure debt,” stressing the importance of concluding these talks to relieve pressure on foreign exchange and facilitate necessary investments.
The government of Malawi faces significant challenges as inflation soars and public discontent grows. The reduction in the growth forecast highlights economic difficulties exacerbated by external factors like drought and currency issues. Authorities are striving to revitalize key sectors, negotiate debt restructuring, and address inflation to stabilize the economy.
Original Source: www.thecitizen.co.tz
