Most immediately, Malawi can take steps to jumpstart investments in climate-resilient infrastructure and halt land degradation and forest loss to improve agriculture productivity and carbon capture. Prioritizing these actions, combined with expanded safety nets and economic diversification, could reduce the number of vulnerable households that would otherwise fall into poverty by as much as three-quarters.

“Malawi’s pathway to economic growth is persistently halted by climate shocks, leaving many millions trapped in poverty for many decades,” says Hugh Riddell, World Bank Country Manager for Malawi.

“Vision 2063 for Malawi provides a clear pathway to build a resilient economy. The World Bank is providing climate financing to support that vision and help the government reduce the impacts of climate change under fiscal constraints.”

Without these investments, climate change could reduce the GDP by 3 to 9 percent by 2030, 6 to 20 percent by 2040, and 8 to16 percent by 2050. Climate change is also reducing the resilience of households and could increase poverty rates in the country, potentially pushing another two million people into poverty over the next 10 years, the report says.

“Climate change will make it harder for Malawi to reach the ambitious goals of Vision 2063. It is crucial for the country to start addressing climate resilience now, starting with lower cost, high impact priorities, as outlined in our development plan and the CCDR,” said Eisenhower Mkaka, Minister of Natural Resources and Climate Change.

In addition, Malawi’s limited fiscal space in the near term calls for additional financing from grants and highly concessional public financing as well as new inflows from the private sector. Malawi can also optimize the use of public sector resources, international public finance, and private investment by minimizing transaction costs and finding new approaches to development that do not increase public debt.

“The private sector has an important role to play in supporting Malawi to both accelerate growth and reduce poverty and respond to the effects of climate change on its economy,” said Madalo Minofu, IFC Country Manager for Malawi. “By unlocking barriers to investment, the public and private sector can work together to mobilize financing for the country’s climate-resilient development.”

This CCDR, the first of its kind in Malawi, aims to support the country’s efforts to achieve its development goals within a changing climate by quantifying its impacts on the economy and laying out a path to robust, climate-resilient growth. It also examines Malawi’s current policy landscape and identifies needed reforms to finance the development and climate agenda including Malawi’s efforts to protect most vulnerable households. The assessment further considers adaptation measures and costs for agriculture, land management, energy, transport, and digital, while considering the macroeconomic, poverty and fiscal implications.