The International Monetary Fund (IMF) has revised upwards, albeit marginally, the global economic growth estimate for 2026 from 3 percent to 3.1 percent.
This is happening at a time geopolitical tensions still pose a threat to low-income economies such as Malawi.
Commenting on the October 2026 World Economic Outlook the IMF issued yesterday in a Facebook post, Reserve Bank of Malawi (RBM) Deputy Governor Kisu Simwaka said the global economy was not expanding enough to create more demand for exports, affecting countries such as Malawi.
Already, he said, there was reduced demand for Malawi’s tobacco exports, which have fallen to $287 million by October, against last year’s $526.2 million.
“That is not an accident. That is because global demand is soft. It is Asia slowing, and Europe stagnating. That also means less donor aid,” Simwaka said.
The ongoing conflicts in the Middle East affect the growth prospects in that region and Asia, disrupting the oil supply chain, and this can affect countries, including Malawi, that depend on oil imports.
According to Simwaka, in a world economy growing at 3.1 percent, small open economies cannot rely on external demand. They must, instead, provide internal nominal anchoring.
“For Malawi, that anchoring must come from foreign reserves’ accumulation and ending fiscal dominance,” he said.
Economist Marvin Banda said the IMF’s focus reinforces the need for resilience as global growth becomes more unpredictable, adding that Malawi cannon control global growth but can control whether its own production base is strong enough to withstand shocks.
He said there is a growing risk on overreliance on tobacco, whose performance determines economic standing, suggesting that Malawi’s economic structure must connect farmers to processors through reliable markets, storage facilities, standards and supply contracts.
According to Banda, investment incentives and public procurement should then reward firms that manufacture competitively in Malawi, not businesses that merely assemble imported goods or seek protection from competition.
“The government should measure progress by whether the country earns more export dollars, reduces avoidable imports, create productive jobs or expand the supply of essential goods,” he said.
Malawi’s economy is expected to grow by 2.7 percent from 2.5 percent last year following Covid, weather shocks, power interruptions and global conflicts that have been affecting productivity.