The economic growth prospects for Malawi and Zimbabwe in 2023 diverge significantly. Malawi’s economic outlook appears grim, with a projected GDP growth rate of only 0.7%. In contrast, Zimbabwe is expected to experience a notable recovery, with an estimated growth rate of 3.2% in 2023, primarily driven by the sectors of agriculture, mining, and services.
In this article, authored by Burnett Munthali, we delve into a comparative analysis of the economic growth trajectories of Malawi and Zimbabwe in 2023. We examine the key factors propelling economic growth in each country, as well as the challenges they confront along the way. By exploring these dynamics, our aim is to gain a comprehensive understanding of the divergent paths these economies are likely to embark upon in the upcoming year. Additionally, we raise the question of whether Malawi will fulfill the promises made by its current leadership and achieve the envisioned “promised land” for its citizens.
Malawi Economic Growth
Food Security
According to statistics in August 2022, between October 2022 and March 2023, the situation was expected to deteriorate, with 3.8 million people in Malawi (20% of the population) expected to face high levels of acute food insecurity (IPC Phase 3), an increase of 8% compared to the current period.
Economic Outlook
Malawi’s economic outlook for 2023 is poor. The forecast maintains that real GDP growth will slow to just 0.7% in 2023. This is down from estimated growth of 1.0% in 2022 and from a projection prior to Cyclone Freddy of 3.7%.
GDP Growth Rate
GDP growth rate is projected to rebound to 2.0% in 2023 and 3.5% in 2024, driven by a recovery in agriculture, tourism, exports, and foreign direct investment. Headwinds include weather-related shocks and the prolongment of Russia’s invasion of Ukraine.
Economic Overview
The economic situation in Malawi in 2022 was that GDP growth was projected to decline to 0.9% in 2022, from 2.8% in 2021, with lower agricultural output, erratic electricity supply, forex shortages affecting importation of raw materials, and high global commodity prices. Economic growth is projected to slightly increase in 2023 but remain subdued.
GDP Ranking
Worldwide gross domestic product in 2021 was about $12,183 per capita. GDP in Malawi, on the other hand, reached $635 per capita, or $12.63 billion for the whole country. Malawi is one of the smaller economies and was ranked 139th at that time.
Zimbabwe Economic Growth
Findings of the 2023 Crop, Livestock, and Fisheries Assessment Report (CLAFA-2) indicate that the country will be cereal self-sufficient during the current consumption year (April 2023 – March 2024) following an expected cereal bumper harvest of approximately 2,300,000 MT of maize and 281,000 MT of small grains.
Economic Growth
Real GDP growth is projected to recover to 3.2% in 2023 and 2024, anchored largely by agriculture, mining, and services. Tight monetary and fiscal policies are expected to increase macroeconomic stability in 2023.
Current Economic Situation
According to a report released in March 2023, the current economic situation in Zimbabwe is that real GDP growth is estimated to have slowed to 3.4% in 2022 from 8.5% in 2021 due to worsening agriculture conditions and macroeconomic instability. Due to low rainfall, agricultural output contracted by 14% after growing at double digits in 2021.
Inflation
Zimbabwe’s annual consumer price inflation skyrocketed to 175.8% in June 2023, up from 86.5% in the previous month, marking a continued deviation from the downward trend observed since the beginning of the year.
Biggest Economic Activity
Zimbabwe’s economy depends heavily on its mining and agriculture sectors. While agriculture remains vulnerable to climate shocks in the country, the sector experienced significant growth in 2022 and recorded the highest wheat harvest in 56 years. The mining industry dominates the industrial sector.
Best Economic System
Zimbabwe has a mixed economy in which there is limited private freedom, but the economy remains highly controlled by the government. Zimbabwe is a member of the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC).
Monetary Policy
Monthly blended inflation is expected to average below 1.5% in 2023. Annual blended inflation is expected to decline progressively to reach 10%-30% by year-end. Policy rates are expected to be aligned with the implied ZW$ inflation path and end 2023 between 30%-60%.
GDP Ranking
Zimbabwe is ranked 101st by nominal GDP. Its national debt in 2021 was €18,175 million ($1,905,213 million), with a debt-to-GDP ratio of 59.81%. Its public debt per capita is €1,136 per inhabitant ($119,124 per inhabitant).
Conclusion
In conclusion, the economic growth prospects for Malawi and Zimbabwe in 2023 are markedly different. Malawi’s economy is facing significant challenges, including low agricultural output, erratic electricity supply, and forex shortages, which indicate a turbulent path ahead. On the other hand, Zimbabwe’s economy is expected to rebound in 2023, primarily driven by the growth in agriculture, mining, and services sectors.
The contrasting economic outlooks of Malawi and Zimbabwe have broader implications for the two countries and the region as a whole. Given the current leadership and prevailing circumstances, it is likely that Malawi’s economy will continue to experience subdued growth in 2023. In contrast, Zimbabwe’s economy is expected to grow at a moderate pace. This disparity in economic growth could potentially contribute to increased inequality between the two nations and potentially spur greater migration from Malawi to other countries within the region.
