Policy Brief: Implications of the Middle East Conflict

This policy brief examines how the escalating conflict in the Middle East is transmitting economic shocks to Malawi through higher fuel and fertilizer prices, disrupted shipping routes, and rising global energy costs. Entering the crisis with critically low foreign‑exchange reserves, elevated inflation, and high public debt, Malawi faces heightened risks to macroeconomic stability, food security, and social welfare.

Using scenario analysis, the brief outlines short‑ and medium‑term impacts on inflation, growth, fiscal balances, and foreign‑exchange reserves, and identifies the population groups most at risk—including smallholder farmers, low‑income urban households, women, and children. It concludes with clear, actionable policy recommendations to safeguard fuel and fertilizer supply chains, protect vulnerable households, manage fiscal and foreign‑exchange pressures, and strengthen long‑term economic resilience.