Tobacco plantation in Malawi

Economic situation Heavy dependence on the weather and world markets

Malawi is an agricultural nation. Formally, agriculture accounts for only around 28 per cent of the country's gross domestic product. However, since most small farmers only produce enough for their own consumption, actual economic output in the agricultural sector is likely to be much higher.

Foreign currency is mainly generated through the export of tobacco and, to a lesser extent, tea, coffee, sugar, cotton and soy beans.

The economy’s heavy dependence on a few unprocessed goods as exports makes it very vulnerable to external influences such as droughts, agricultural pests or price fluctuations on the world market. In addition, Malawi lacks access to the sea, making it reliant for its foreign trade on transit routes through neighbouring countries.

The economy is also held back by the country's inadequate power supply. Little more than ten per cent of the population have access to electricity.

In the past five years, the Malawian economy has shown growth rates between 2.5 and 5.7 percent. For 2019, the International Monetary Fund (IMF) expects an increase in economic output of 4.5 percent, with values above five percent in the following years.

A woman in Malawi mounts a small solar system on the roof of her house.

A woman in Malawi mounts a small solar system on the roof of her house.

A woman in Malawi mounts a small solar system on the roof of her house.

Development potential

Agriculture, tourism and mining all have the potential to boost economic development. In order to harness this potential, agricultural production, for example, must be modernised and expanded to include new products. And to attract greater numbers of tourists, Malawi must improve its political stability and step up conservation of its natural resources. The country has a great variety of landscapes and has already established a number of conservation areas. Wildlife numbers have increased markedly in recent years.

In the future, the country's mining sector could also contribute to economic development: Malawi has not only uranium deposits – which are currently not worth mining because of the depressed prices for the mineral on the world markets – but also other resources such as rare earths and recoverable oil and gas reserves.