Malawi’s government has cut its 2025 growth forecast to 3.2% amid protests over inflation. Street vendors and unemployed youths express discontent with President Chakwera’s administration due to rising prices and foreign exchange shortages. The Finance Minister aims to address these issues through improved production and anti-crime measures targeting the black market for currency.
Malawi’s government has revised its economic growth projection downward for 2025 in its annual budget, coinciding with widespread protests against rising prices in major cities. These protests, primarily led by street vendors, highlight public discontent with the government’s ability to manage double-digit inflation that threatens their livelihoods. As protests have spread from Lilongwe to Blantyre, jobless youth have also joined the demonstrations, voicing their dissatisfaction with President Lazarus Chakwera’s administration.
In his budget address, Finance Minister Simplex Chithyola Banda indicated that the economy is now expected to grow by 3.2% in 2025, a decrease from the previously forecasted 4.0% made in December. The previous year’s growth rate was pegged at only 1.8%, largely due to the adverse effects of a regional drought that severely impacted agricultural production, the cornerstone of Malawi’s economy. Inflation reached 28.5% in January, exacerbated by critical foreign exchange shortages affecting the importation of essential goods, including fuel and fertilizers, which has spurred a burgeoning black market for foreign currency.
Minister Banda elaborated that the government aims to alleviate forex shortages by enhancing production in key sectors such as agriculture, tourism, and mining. He announced plans to establish a national anti-crime unit to address issues related to the parallel foreign currency market. The current fiscal year’s budget deficit is projected at 9.6% of gross domestic product (GDP) and is anticipated to slightly reduce to 9.5% next year.
As of September 2024, public debt was estimated at approximately 86% of GDP, with ongoing efforts to conclude debt-restructuring discussions. “Government in principle has reached agreements with all official bilateral creditors and is still negotiating with commercial creditors to restructure debt,” stated Banda. He expressed optimism that the finalization of these negotiations will alleviate pressure on foreign exchange resources and create fiscal space to encourage productive investments.
In summary, Malawi’s economic landscape faces significant challenges with a lowered growth forecast for 2025, heightened inflation, and public unrest due to rising economic pressures. The government’s initiatives to address foreign exchange shortages and public debt aim to stabilize the economy and foster growth. However, the ongoing protests underscore the critical need for effective management and support for vulnerable citizens to rebuild trust and promote sustainable economic progress.
Original Source: www.straitstimes.com
