Malawi’s government has lowered its 2025 growth forecast to 3.2 percent from 4.0 percent in response to significant public protests fueled by rising inflation. Street vendors and unemployed youths are demanding better economic management as inflation reached 28.5 percent. The government plans to address foreign exchange shortages by boosting key sectors and tackling illegal currency markets.
The government of Malawi has revised its economic growth forecast for the year 2025, reducing it from 4.0 percent to 3.2 percent amid escalating public discontent over soaring inflation rates. Protests have erupted in major cities, largely driven by street vendors who express concerns about the government’s inability to manage double-digit inflation, which they argue threatens their livelihoods.
Demonstrations have intensified, extending from the capital, Lilongwe, to Blantyre, Malawi’s principal commercial center. In addition to vendors, the protests have attracted unemployed youths who are dissatisfied with the administration of President Lazarus Chakwera. Finance Minister Simplex Chithyola Banda acknowledged the recent economic challenges during his budget speech, citing a growth rate of only 1.8 percent for the previous year, primarily due to a severe drought impacting agricultural output.
As inflation spiked to 28.5 percent year on year as of January, it has been exacerbated by critical foreign exchange shortages that hinder the importation of essential goods, including fuel and fertilizers. In response, the government intends to enhance dollar inflow by increasing productivity in agriculture, tourism, and mining, as well as establishing a national anti-crime unit to dismantle the illegal foreign currency market.
The current fiscal year presents a projected budget deficit of 9.6 percent of GDP, with the following year expected to be slightly reduced to 9.5 percent. Public debt remains a concern, recorded at approximately 86 percent of GDP as of September 2024, with ongoing negotiations for debt restructuring with both official and commercial creditors. Minister Banda indicated that these negotiations aim to alleviate pressure on foreign exchange resources and create fiscal headroom for productive investments.
In summary, Malawi’s government faces significant challenges with inflation and economic growth as it anticipates a reduced growth forecast for 2025. Protests from street vendors and unemployed youths highlight public dissatisfaction with current economic conditions. The government is striving to improve foreign exchange shortages and manage public debt through strategic negotiations. Immediate action is required to restore confidence and stability in the economy.
Original Source: www.thecitizen.co.tz
