Malawi’s per capita income fell for the third time in a row in 2024, as population growth continued to outpace gross domestic product (GDP) growth, the World Bank has said.
Economic commentators have since described the trend as worrisome.
Per capita income is a measure of the amount of money earned per person in a nation or geographic region.
Per capita income is used to determine the average per-person income for an area and to evaluate the standard of living and quality of life of the population.
In its 20th Malawi Economic Monitor (MEM) released last Thursday, the World Bank says per capita growth remained negative in 2024 amid a severe drought and continued foreign-exchange shortages.
‘Malawi’s economic growth rate ticked up slightly in 2024 but remains low due to shocks and the slow pace of macroeconomic reforms. Malawi’s economy is expected to grow by 1.8 percent in 2024, below the 2.0 percent projected in April 2024.
“With the population growing at about 2.6 percent, this marks the third consecutive year of declining per capita income. The El Niño-induced drought negatively impacted agricultural output,” the MEM reads.
Economics Association of Malawi (Ecama) President Bertha Bangara Chikadza said on Thursday that a decline in per capita income for three consecutive years was a concerning trend for Malawians.
Chikadza said this was concerning because falling per capita income meant the country was experiencing reduced standard of living, as lower per capita income means individuals, on average, have less money to spend on essential goods and services.
This, according to Chikadza, limits access to necessities such as food, healthcare and education, ultimately worsening poverty levels.
“Additionally, economic instability becomes a major concern. A shrinking per capita income reduces consumer spending, which negatively affects businesses, potentially leading to job losses and a slowdown in economic activity.
“This trend is also worrying as it signals a regression in the fight against poverty and wealth creation, just five years before the 2030 Sustainable Development Goals (SDGs) deadline. Instead of making progress, the country appears to be moving in the opposite direction,” she said.
Chikadza added that to address the decline in per capita income, Malawi could consider strategic interventions such as addressing declining GDP growth.
Scotland-based economist Velli Nyirongo said a decline in per capita income for the third consecutive year in 2024 was a cause for concern for Malawians.
According to Nyirongo, this trend signals deterioration in living standards, exacerbating poverty levels and limiting economic opportunities for individuals and businesses alike.
Additionally, Nyirongo said diversifying the economy beyond agriculture by fostering industrialisation, digital transformation and entrepreneurship could create alternative sources of employment and income.
On his part, Blantyre-based economist Marvin Banda said GDP per capita was a quotient derivative of production capacity and population size.
He observed that what needed to be done was easier said than done.
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