Tea plantations on Mount Mulanje

Malawi Economy

Estimated GDP: $ 7.67 billion (estimated, 2019)

Per capita income (purchasing power parity): US $ 412 (estimated 2019)

Human Development Rank (HDI): Rank 172 (out of 189), 2018

Proportion of poverty (less than $ 1.90 per day): 70.3% (2016)

Distribution of income (Gini coefficient): 46.1% (2016)

Economic Transformation Index (BTI): Rank 101 of 137 (2020)


According to extrareference, Malawi is a pronounced agricultural country. So far, apart from uranium, hardly any mineral raw materials have been mined, although significant deposits have recently been discovered. Among other things, oil and gas deposits are being developed in Lake Malawi and on the coast. The manufacturing industry in the four cities (Blantyre, Lilongwe, Zomba and Mzuzu) is small and insignificant internationally. The GDP is only an estimated 7.67 billion US dollars (2019), which corresponds to an average per capita income of only 412 US dollars. This makes Malawi one of the poorest countries in the world. According to the current Human Development Report it ranks 172 out of 189 countries examined. 84% of the population (2018) live in the countryside. A considerable part of the rural population (over 90%) lives from agriculture; essentially as small and subsistence farmers. These are poor and live in potentially precarious living conditions. Despite the strong population pressure and the associated scarcity of land, enough food can be produced to meet the needs on one’s own. However, this balance is very unstable. Even minor climatic problems (drought or floods) can lead to a shortage of food and trigger a crisis, as most recently in 2002 and again in 2005/2006. The World Food Program reports on the current situation. Due to good harvests since 2006, the situation has eased significantly. However, the severe flooding in large parts of the country as a result of heavy rain (January-March 2015) devastated significant parts of the fields with disastrous effects on the 2015 harvest. The 2016 harvest was also significantly affected by drought in the southern region and heavy rain in the northern region Consequences for food safety. While the 2017 harvest was significantly better again due to the favorable climatic conditions, the 2018 and 2019 harvests were again affected by regional flooding. The negative effects of climate change on agriculture are on the whole southern Africa and will continue to increase in Malawi.

The share of agriculture in GDP is traditionally high at 25.6% (2019), while the industrial sector remains relatively insignificant at 12.9%. The service sector accounts for 54.4%.

Real growth is strongly dominated by agricultural production. This depends on the climatic conditions and is therefore volatile. In 2008 a record growth of 9.7% was achieved. The annual growth from 2009-2014 was between 4-7.5%. However, growth fell significantly to 3% in 2015 due to the unfavorable climatic conditions and even fell to an estimated 2.3% in the following year. Due to the better harvest in 2017, the value recovered to 4.5% in 2017. The crop losses due to floods slowed economic growth in 2018 to 3.5%, but recovered in 2019 with growth of 4.4%. The food supply for large parts of the rural poor remains precarious.

The economy is burdened by the unreliable power supply, which despite some investments cannot meet the increased demand. The chronic foreign exchange shortage has been overcome since 2013, as the overvaluation of the local currency ended with the release of the Kwacha exchange rate.

In its current ranking, the US Heritage Foundation rates Malawi with an index value of 52.8 (2019: 51.4). The country ranks 152 out of 180 and falls under the category “mostly unfree”. Malawi ranks 34th among the 47 states of Sub-Saharan Africa (2019: 32nd). Problems arise primarily in the fields of corruption, taxation and labor law, while successes have become apparent in property law, budget discipline and the judiciary. In the World Bank’s Doing Business Index 2020, Malawi improved by two to 109th place (previous year: 111 out of 190 countries listed), the index value rose slightly to 60.9 (previous year: 60.4). The Bertelsmann Transformation Index for a free market economy, Malawi is currently only 101st out of 137 countries listed.

The African Development Bank offers a detailed overview of the current economic situation. The Reserve Bank of Malawi offers downloadable monthly and quarterly reports that are high quality and reasonably detailed. The financial situation of the economy is reported in detailed reports. Germany Trade & Invest offers basic information on trading and an economic outlook.

Foreign trade

Malawi traditionally has a negative trade balance. The deficit is significant. It was $ 1,748 (2017: 571) million in 2018. There is a worryingly high dependency on the main export commodity tobacco, which generates over 71.3% of export revenues. The proportions of tea (10.4%), sugar (4.1%), nuts and dried legumes (5.4%), coffee and spices lag significantly behind. From time to time even surpluses of corn can be exported to neighboring countries, which is prevented in times of crisis. The bad corn harvest of 2016 made imports required. Since 2010, uranium had taken second place among the main export goods after tobacco. It contributed around 10% of GDP. However, the mine in Karonga was owned by Paladin Africa Ltd. Closed for the time being at the beginning of 2014 due to the sharp fall in world market prices.

The only slightly differentiated economy is also clear in terms of volume: The total value of goods exports in 2018 was only 870 (2017: 869) million US dollars. The main export countries are Belgium, Germany, Russia, the USA and South Africa. Goods to the value of 2,618 (2017: 1,440) million US dollars (2017) were imported. The most important import countries are South Africa, PR China, India, Zambia and Tanzania. Trade relations with SADC states continue to play an important role. The WTO has detailed reports on trade policy ready.

Tea plantations on Mount Mulanje

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