The Malawian government has revised down its economic growth forecast for this year in its annual budget, as discontented citizens took to the streets in major cities to protest rising prices.
As demonstrations spread from the capital, Lilongwe, to the commercial hub of Blantyre, they were joined by unemployed youths frustrated with President Lazarus Chakwera's government.
Finance Minister Simplex Chithyola Banda stated in his budget speech that the economy of the donor-dependent southern African nation is now expected to grow by 3.2% in 2025, down from the 4.0% forecast given in December.
Last year’s growth was estimated at 1.8% due to the impact of a severe regional drought that affected agricultural production, a key pillar of the economy.
Inflation stood at 28.5% year-on-year in January, driven up by foreign currency shortages that hampered imports of essential goods such as fuel and fertilizers, fueling a thriving black market for foreign exchange.
Banda said the government aims to address the currency shortage by boosting production in sectors with the potential to generate foreign exchange revenue, such as agriculture, tourism, and mining.
The budget deficit for the current fiscal year is projected at 9.6% of gross domestic product (GDP), while next year’s deficit is estimated at 9.5% of GDP.
Public debt stood at approximately 86% of GDP as of September 2024, and the government continues to negotiate debt restructuring agreements.
"The government has reached agreements in principle with all official bilateral creditors and is still negotiating with commercial creditors to restructure the debt," Banda was quoted as saying by Reuters.
