Important notice:  For up to date information about the pandemic visit www.who.int 
Corporate and Investment
Sign in
Corporate and Investment Bank
Products and Services
Products and Services
Transactional Products and Services
Cash Management
Trade Finance
Investor Services
Swift for Corporates
Transactional Channel including Business Online
Global Markets
Client Solutions
Commodity Trading
Credit Trading
Equity Derivatives
Exchange Traded Products
Foreign Exchange
Interest rates trading and structuring
Money Market Instruments
Investment Banking
Advisory
Debt Capital Markets
Equity Capital Markets
Debt Solutions
Principal Finance
Sectors
Sectors
Wealth and Investment

AMR: Malawi

AMR: Malawi

We expect GDP growth around 1.8% in 2020 and 2.4% in 2021. We expect the C/A deficit to remain elevated at over the next 2-y over 10.0% of GDP. We see the USD/MWK ending the year closer to 817.

Population
17.5m
Nominal GDP
USD7.77billion
Real GDP growth
4.0%
CPI
9.36%

GDP growth – pandemic uncertainty

The COVID-19 pandemic will change that growth trajectory, likely reducing economic growth to 1.8% this year, with a recovery next year. 

Notably, a civil rights group won a legal challenge delaying the government from implementing a 21-day lockdown to contain viral spread, and demanding government should provide a social safety net for the poor before implementing any lockdown. Uncertainty around the outcome of the presidential election scheduled for H2:20 adds to near-term downside risks.

Balance of payments – pressures building 

The C/A deficit will likely remain above 10% over the next 2-y and FX reserves above USD 600m, corresponding with 3-m of import cover. 

Such a wider C/A deficit this year could be due to, largely, the uncertainty surrounding tobacco inflows. Potential disruptions, due to the pandemic, to the tobacco marketing season would reduce export inflows. 

Monetary policy – accommodative tilt 

The Reserve Bank of Malawi is likely to cut the policy rate over the next 4-m. It had left the policy stance unchanged for almost a year, last cutting the policy rate by 100 bps in Mar 19. To be sure, the policy rate remains at 13.5%.

FX outlook – stable, for now

Before moving over 810 by year-end, we’d expect the USD/MWK trading around 750 in 4-m. Guidelines in place for foreign exchange trading activities have limited the currency’s upward movement, and this could keep the MWK stable despite mounting USD demand.

View the latest report