Global shocks threaten economic prospects

Malawi could face renewed pressure on the cost of living and economic activity if global food and energy disruptions persist, economists have said.

The warning comes as higher fuel, fertilizer and other commodity prices risk adding to the costs faced by the population.

The warning comes amid heightened global economic uncertainty, with the International Monetary Fund (IMF) identifying geopolitical conflict, disruptions to energy supplies, and extreme weather among the risks that could push commodity prices higher.

In its October 2026 World Economic Outlook the IMF says further disruptions to major transport routes and supply chains could keep energy prices elevated and increase pressure on global inflation.

Malawi is already grappling with fuel shortages that have contributed to rising transport costs, which rose by 14.29 percent in September 2026, according to the Employer’s Association of Malawi’s (Ecam) Cost of Living Analysis Report.

Economics Association of Malawi president Bertha Chikadza said fuel shortages, rising transport costs and increasing food prices were already putting additional pressure on households and eroding their purchasing power.

“This increase also reduces savings and investments in the economy as people channel these funds towards covering their basic needs,” Chikadza said.

For businesses, Chikadza said the rising cost of living was creating additional labour cost pressures as employees seek wage increases to cope with higher living expenses.

Meanwhile, energy and foreign exchange constraints continue to weigh on business productivity, resulting in over 50 percent of businesses in the country operating below their capacity.

The country also faces a modest growth outlook and persistent inflationary pressures, with the economy projected to grow by 2.6 percent in 2026 before slowing to 2.3 percent in 2027.

Although headline inflation declined to 19.4 percent in September, below the IMF’s projected annual average of 21.9 percent for 2026, the Fund expects inflation to rise to an average of 25 percent in 2027, highlighting further price pressures.