Malawi faces fall out asIMF cuts growth forecast

Malawi faces fiscal pressure as the International Monetary Fund (IMF) has slashed its 2025 global growth forecast, fuelling concerns of reduced trade and aid.In its April 2025 World Economic Outlook, the IMF downgraded global growth projections to 2.8 percent, down 0.

5 percentage points from 3.3 percent, citing widespread trade tensions.Gourinchas: The global economy needs repair.



| NationThe fund attributed the revision to sweeping United States (US) tariffs and retaliatory measures from other major economies.This figure now trails Malawi’s own projected growth of 3.3 percent, presented by Minister of Finance Simplex Chithyola-Banda in the 2025/26 National Budget Statement in February this year.

The IMF also forecast global trade to grow by just 1.7 percent this year, less than half of last year’s rate.At least 60 percent of Malawi’s exports are tied to the global market.

IMF chief economist Pierre-Olivier Gourinchas warned in a statement that the risk of a global downturn had increased substantially, rising from 17 percent in October 2024 to 30 percent.He said: “The global economy needs a clear, stable, and predictable trading environment,” he said during the launch in Washington.“Even if grievances against the global trading system exist, we must work to fix it—not break it.

”For Malawi, whose economy heavily relies on donor inflows and commodity exports such as tobacco and tea, the implications are serious.The global lender also warned of “reduced official aid flows” and “tightening global financial conditions,” which could strain public finances in already vulnerable countries.Scotland-based Malawian economist Velli Nyirongo said in an interview on Wednesday that Malawi’s fiscal position is uniquely exposed due to “high public debt and dependence on domestic borrowing, which he said increases the country’s vulnerability to external shocks.

“This threatens export demand for tobacco and tea, restricts access to concessional financing, and heightens debt service costs amid low foreign reserves,” he said.Nyirongo urged authorities to take corrective action by pursuing “credible fiscal consolidation, strengthening public financial management, and securing new concessional finance”.On his part, EK Tax Consulting senior tax consultant Emmanuel Kaluluma, who is also a former commissioner of customs at the Malawi Revenue Authority, said the projected slowdown should not cause panic.

He said: “It is undeniable that there will be an effect. We will lose out in terms of trade and aid that we get from countries such as the US, China and Germany.“But we need to understand that these are just estimates.

The real performance might not be as pronounced as it seems.”Despite the headwinds, both local experts and the IMF see opportunity in adversity.The experts agree that the country’s untapped mining potential, particularly rare earths and other critical minerals, is strategic lever for growth.

Meanwhile, the IMF has called for structural reforms, targeted social safety nets, and renewed international cooperation to protect vulnerable populations.The post Malawi faces fall out asIMF cuts growth forecast appeared first on Nation Online..