The International Monetary Fund (IMF) has spelled doom for Malawi’s economic prospects in its latest outlook. Its projections show that the country’s fragile recovery is expected to lose momentum in 2027.
The IMF’s October 2026 projections put Malawi’s real GDP growth at 2.6% this year, slightly above 2.5% in 2025. The economy will plummet to 2.3% in next year.
Meanwhile, sub-Saharan Africa is projected to grow by 4.5% in both 2026 and 2027. That would leave Malawi growing at barely half the regional rate next year.
“But resilience is not immunity. The regional aggregate masks very different country experiences,” IMF African Department Director Zeine Zeidane said, speaking about the regional outlook.
The gap with neighbouring economies is stark. Tanzania is projected to grow by 5.9% in 2027, Zambia by 4.9% and Zimbabwe by 3.5%, against Malawi’s 2.3%.
The report warns that Malawi’s foreign-exchange shortages are undermining its ability to cover domestic production shortfalls through imports. This leaves essential supplies exposed when local harvests or energy generation fall.
“In Malawi, foreign-exchange shortages constrain energy, food and fertilizer imports, limiting the ability to offset domestic shortfalls,” reads the report.
The warning comes amid risks of poor rainfall across southern Africa. Forecasts for October 2026 to March 2027 favour below-normal rainfall across much of the region, including parts of Malawi, Mozambique, Zambia and Zimbabwe.
“Crop and pasture losses could reduce rural incomes and raise food prices; lower reservoir levels could constrain hydropower,” the report states.
That raises the prospect of pressure on food supplies and electricity generation at the same time. Reduced domestic production would increase the need for imports that Malawi is already struggling to finance.
“Lower output would weaken revenue just as import bills and emergency spending rise. Hydropower shortfalls would increase demand for costly fuel and electricity imports,” the report warns.
The IMF points to the 2023/24 drought as evidence of the potential damage. Zambia’s maize harvest fell by about half, while falling reservoir levels contributed to prolonged power cuts affecting mainly households.
The outlook comes amid fears of another kwacha devaluation, with the dollar reportedly trading on the parallel market at roughly twice the official exchange rate. The gap adds to concerns about Malawi’s ability to finance essential imports.
Speaking about policy responses across the region, Zeidane said: “Where regimes permit, exchange-rate flexibility can help absorb the shock and preserve reserves.”
He also warned against policy choices that undermine future growth: “But resilience today must not be financed by sacrificing tomorrow’s growth.”