View the information below regarding the economy of Malawi. The summary and statistics contains
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Malawi Country Page.
GDP (2002 est.): About $1.9 billion.
Annual real GDP growth rate (2002 est.): 1.8%.
Per capita GDP (2000 est.): Approx. $180.
Avg. inflation rate (2003): 9.0%.
Natural resources: Limestone, uranium (potential), coal, bauxite, phosphates, graphite, granite, black granite, vermi lite, aquamarine, tourmaline, rubies, sapphires, rare earths.
Agriculture (approx. 36% of GDP): Products--tobacco, sugar, cotton, tea, corn, potatoes, cassava (tapioca), sorghum, coffee, rice, groundnuts. Arable land--34%, of which 86% is cultivated.
Industry (16% of GDP): Types--tea, tobacco, sugar, sawmill products, cement, consumer goods.
Trade (2001 est.): Exports--$435 million: tobacco, tea, sugar, coffee, peanuts, wood products. Partners--U.S., South Africa, Germany, Japan. Imports--505 million: food, petroleum products, semimanufactures, consumer goods, transportation equipment. Partners--South Africa, Zimbabwe, Japan, U.S., U.K., Germany.
Fiscal year: July 1-June 30.
Economy of Malawi
Malawi is a landlocked, densely populated country. Its economy is heavily dependent on agriculture. Malawi has few exploitable mineral resources. Its two most important export crops are tobacco and tea. Traditionally Malawi has been self-sufficient in its staple food, maize, and during the 1980s exported substantial quantities to its drought-stricken neighbors. Agriculture represents 36% of the GDP, accounts for over 80% of the labor force, and represents about 80% of all exports. Nearly 90% of the population engages in subsistence farming. Smallholder farmers produce a variety of crops, including maize (corn), beans, rice, cassava, tobacco, and groundnuts (peanuts). Financial wealth is generally concentrated in the hands of a small elite. Malawi's manufacturing industries are situated around the city of Blantyre.
Malawi's economic reliance on the export of agricultural commodities renders it particularly vulnerable to external shocks such as declining terms of trade and drought. High transport costs, which can comprise over 30% of its total import bill, constitute a serious impediment to economic development and trade. Malawi must import all its fuel products. Paucity of skilled labor; difficulty in obtaining expatriate employment permits; bureaucratic red tape; corruption; and inadequate and deteriorating road, electricity, water, and telecommunications infrastructure further hinder economic development in Malawi. However, recent government initiatives targeting improvements in the road infrastructure, together with private sector participation in railroad and telecommunications, have begun to render the investment environment more attractive.
Malawi has undertaken economic structural adjustment programs supported by the World Bank (IBRD), the International Monetary Fund (IMF), and other donors since 1981. Broad reform objectives include stimulation of private sector activity and participation through the elimination of price controls and industrial licensing, liberalization of trade and foreign exchange, rationalization of taxes, privatization of state-owned enterprises, and civil service reform. Malawi qualified for Highly Indebted Poor Country (HIPC) debt relief and is in the process of refining its Poverty Reduction Strategy.
Real GDP grew by 2.1% in 2000 and 1.8% in 2002. Although the average annual inflation has been reducedto 9.0% in 2002 the discount and commercial bank rates remained high at 40%-45%. In mid-2003 the Kwacha slid from 90 to 101 against the US dollar sparking concerns that inflation would begin returning to pre-2002 rates of 30%-40%. Malawi has bilateral trade agreements with its two major trading partners, South Africa and Zimbabwe, both of which allow duty-free entry of Malawian products into their countries. The government faces challenges such as the improvement of Malawi's educational and health facilities--particularly important because of the rising rates of HIV/AIDS--and environmental problems like deforestation, erosion, and overworked soils.