The 19th edition of the Malawi Economic Monitor outlines urgent policy measures required to stabilize the economy, protect vulnerable households, and enhance long-term growth. The focus should be on: 

        i) Restoring macroeconomic stability: Planned macro-fiscal reforms must be implemented and sustained to achieve fiscal consolidation, ensure the success of external debt restructuring, and contain the growth of domestic borrowing. 

      ii) Bolstering food security, building resilience, and protecting the poor: Given the food deficit in the upcoming lean season, it will be essential to import maize to alleviate food insecurity while also advancing policy measures to build resilience. The existing social protection infrastructure must be effectively leveraged to provide targeted and adaptable support to poor and vulnerable households. 

    iii) Strengthening productive capacity and diversifying exports: With climate-induced natural disasters and extreme weather events likely to intensify, promoting sustainable farming practices and investing in irrigation systems will be essential to build resilience and ensure adequate food security. 

The report’s Special Topic highlights improvements in the performance of Malawi’s social protection system, including cutting-edge innovations in climate adaptation and household-level support. Malawi is exceptionally vulnerable to climate change and other shocks. A lack of savings and other coping mechanisms increases the burden such that for every three Malawians who escaped poverty between 2010 and 2019, four others fell into poverty due to weather-related shocks. As climate risks continue to intensify, Malawi will increasingly face multiple successive and overlapping shocks. The social protection system is therefore the country’s main policy framework for building long-term resilience to climate and weather-related shocks at the household level. 

Greater investment in social protection, building on the strong foundations laid over the last two decades, will enable Malawi to respond swiftly and effectively to a more volatile environment. In recent years, investments in improving the social protection system have highlighted its capacity to protect a larger share of households more effectively against a broader range of shocks. Despite these achievements, institutional fragmentation remains a challenge, as the social protection sector remains divided among several different line ministries tasked with various aspects of program implementation, which complicates coordination. The policy framework is also incomplete. Further reforms to the sector should emphasize sustainable financing and prioritize the progressive expansion of coverage and benefit levels.