Lilongwe, February 24, 2026- According to the latest report from the World Bank GroupMalawi Economic Monitoring Report 'Correct Reform'》After years of high inflation, expanding fiscal and external deficits, and declining exports, the Malawian economy needs coordinated action to restore macroeconomic stability, reignite export driven growth, and create much-needed employment opportunities for citizens.

        Every year, 270000 young people enter the labor market - but only about 40000 formal jobs - creating employment has become a core economic challenge. The report calls for accelerating key reform progress, restoring fiscal and debt sustainability, addressing foreign exchange shortages, increasing and diversifying exports, and improving service delivery - laying the foundation for private sector led employment growth.

        The macroeconomic situation in Malawi remains fragile. The expected real GDP growth in 2025 is 1.9%, lower than population growth, marking the fourth consecutive year of decline in per capita GDP. The fiscal deficit remains one of the highest in sub Saharan Africa, with interest payments accounting for nearly half of domestic income, public debt accounting for about 90% of GDP, and the country still facing external debt difficulties. Inflation remains high, mainly driven by food prices and large-scale fiscal deficits, while rising public debt continues to squeeze credit to the private sector.

        MEM emphasizes that macroeconomic stability is crucial for job creation. Without predictable policies, foreign exchange channels, and sustainable public finances, private investment as an employment engine cannot grow at the scale required by Malawi.

        MEM's special topic "Reversing Malawi's Export Decline" emphasizes the sharp deterioration of exports over the past decade, which has had an impact on employment. High and unpredictable trade costs - stemming from non-tariff barriers, complex and time-consuming licensing processes (often taking weeks), temporary import and export bans, and slow border procedures - reduce competitiveness and make companies unwilling to expand production and recruitment. The distortion of the foreign exchange market has increased uncertainty and suppressed investment. Therefore, since 2014, the proportion of commodity exports to GDP has decreased, the number of export enterprises has significantly decreased, and many enterprises have turned to informal and smuggling, which has facilitated illegal trade. Malawi's export basket remains highly concentrated, with tobacco still dominating, and the diversification process has weakened, with fewer product lines and markets than a decade ago.

        The new opportunities in agricultural product processing, such as macadamia nuts, soybeans, and peanuts, as well as emerging mining projects, demonstrate the potential to improve the economy and create value chain employment. However, inconsistent policies, foreign exchange shortages, and infrastructure limitations have limited scale, competitiveness, and job creation.

        Malawi has the talent and opportunity to turn the tide - as long as the country quickly stabilizes its macroeconomy and removes bottlenecks that cause production and export difficulties, "said Filas Rad, Country Manager for Malawi at the World Bank." MEM suggests that by simplifying trade procedures, improving border efficiency, and developing predictable policies, the country can unleash new investments in agricultural processing and manufacturing - creating better jobs and higher incomes, which are the foundation of economic growth

        To stabilize the economy and support job creation, MEM suggests strengthening fiscal discipline, increasing domestic revenue mobilization, including simplifying inefficient tax exemptions and prioritizing the development of productive expenditures. The report also calls for progress in debt restructuring and foreign exchange imbalances to anchor inflation expectations. According to the comprehensive employment strategy, the report urges a shift in agricultural spending from inefficient subsidies, deepening fiscal decentralization to improve local services, expanding affordable and reliable access to electricity, and promoting private sector investment in the road sector. Investment in physical and human capital, including skills that align with labor market demand, is crucial for business growth and job creation.

        To reverse the decline in exports, MEM calls for targeted reforms, with a focus on improving trade efficiency and ensuring predictability. This includes modernizing border management through simplified digital import and export licensing procedures, as well as implementing transparent time limited trade measures. Strengthening export performance is not only crucial for foreign exchange and growth, but also the core of creating more and better job opportunities.

        The Malawi Economic Observatory concludes that implementing reforms correctly and prioritizing them appropriately can quickly alleviate pressure on businesses, drive export growth, and lead the economy onto a more resilient and inclusive growth path. Through decisive implementation and strong public-private partnerships, Malawi can reverse the decline in exports, rebuild stability, unleash the vitality needed by the private sector, and create more and better job opportunities.