MALAWICOUNTRY ECONOMICMEMORANDUMA Narrow Pathto ProsperityPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedA Narrow Pathto ProsperityMALAWICOUNTRY ECONOMICMEMORANDUM© 2023 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attri-bution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Cover image: “Mbee” by Robert KaloloCover design, interior design and typesetting: Piotr Ruczynski, London, United Kingdom8 KEY FINDINGS FROM THE COUNTRY ECONOMIC MEMORANDUM1 Over the past 30 years, Malawi’s per capita gross domestic product (GDP) has increased by over 50 percent, a growth trajectory comparable to that of other countries in the region but insufficient to significantly raise living standards and close the gap to its neighbors. Some peer countries have managed to triple their per capita GDP over this time resulting in dramatically reduced poverty rates. Analysis using the World Bank’s “Long-Term Growth Model” shows that there is no single solution to reaching the Malawi 2063 growth targets. Rather, reaching upper middle-income status in the next 40 years will require simultaneously increasing the effectiveness and efficiency of public investment, catalyzing private investment and enhancing economy-wide efficiency. 2 Malawi’s disappointing economic growth outcomes can be attributed to pol-icy choices that have worsened an already unfavorable external environment and resulted in significant fiscal and external imbalances. Weak fiscal planning and implementation make budgets an ineffective guide to resource allocation. Unsustainable debt, driven by high fiscal deficits, is a drain on economic growth. Inadequate management of external balances promotes costly balance-of-pay-...
