Key takeaways

• Malawi faces significant economic and food security risks from overlapping El Niño impacts and Iran war fuel and fertilizer price shocks, a modeling exercise shows.
• Possible impacts include weaker growth, declines in agricultural production, and higher food prices, though the outcomes are uncertain.
• Food security could deteriorate sharply in 2027. In the average scenario, nearly 500,000 more people fall into poverty and about 4.6 million more become undernourished.

First in a series.

El Niño events are extended periods of warmer-than-usual sea surface temperatures in the eastern tropical Pacific that alter global atmospheric circulation, affecting seasonal rainfall patterns in many parts of the world. Currently, El Niño is strengthening rapidly. NOAA’s Climate Prediction Center forecasts a greater than 90% chance of a very strong El Niño in 2026-27 and a nearly 70% chance that its peak strength will exceed that of all previous El Niño events since 1950. Meanwhile, the Iran war and disruption of shipping through the Strait of Hormuz have driven up prices of fuel and fertilizers.

Together, these overlapping shocks pose potentially serious threats to food production and food security, though the specific impacts vary by geography and timing. This is the first in a series of blog posts focused on impacts in Ethiopia, Kenya, Malawi, and India and on the global food system as a whole. These posts will reflect a combination of economic modeling and policy research and inform an early October policy seminar.

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Historically, El Niño events are strongly associated with reduced rainfall during Southern Africa’s main cropping season (December-March). Malawi, however, has sometimes escaped serious El Niño impacts. Thanks to its position on the northern edge of the region, the degree to which it is affected by drought during strong El Niño years has varied widely (Figure 1). In 1997/98 for example, drought affected parts of Zambia, Zimbabwe, Mozambique, and South Africa but did not extend far enough north to affect Malawi, while in 2015/16 significantly below-average rainfall affected almost the entire country.

Even if it avoids a serious drought, Malawi is still vulnerable to market disruptions from the Iran war. It is wholly dependent on imports for both fuel and fertilizers and has required large imports of maize to meet national demand in recent years, meaning that 2027 crop production and food security could be affected even if rains are normal

Our modeling exercise suggests that a combination of market and climate shocks poses a serious threat to Malawi’s economy, agricultural sector, and food security. In particular, if the strong El Niño significantly reduces crop production, the model indicates falling GDP, higher domestic food prices, hundreds of thousands pushed into poverty, and millions more undernourished people.

The model

We employed RIAPA, IFPRI’s standard computable general equilibrium (CGE) model. This model, calibrated to a 2023 Social Accounting Matrix (SAM) for Malawi, represents 15 household groups and a detailed national economy, including 29 agricultural subsectors. This allows us to model both the direct effects of lower crop yields and higher input prices and how those shocks propagate through food prices, employment, household incomes, and the wider economy. Changes in poverty and prevalence of undernourishment are estimated with the aid of a linked microsimulation model.

We first established a prewar, business-as-usual baseline in which national GDP grows by around 3% per year through 2027, with somewhat faster growth outside agriculture than within agriculture. Consistent with current policy, we assumed that Malawi maintains a fixed exchange rate regime over this period.

We then updated this baseline to incorporate what is already known about the effects of the war in Iran on fuel and fertilizer prices in 2026, which provides our revised economic outlook for 2027, before considering the more uncertain effects of El Niño.

Strait of Hormuz impacts

The disruption in global fertilizer markets since the outbreak of war in February is likely to have a serious impact on Malawi’s economic outlook, while the effects of higher global oil prices are relatively mild, the model shows.

Relative to a prewar Brent crude baseline of about $67 per barrel, the model has oil prices rising to $86 in 2026, with 2027 scenarios in which they either fall to $70, remain at $86, or rise to $105. The choice between these scenarios has relatively little effect on national and agricultural GDP in 2027 (Figure 2, Panel A), although higher fuel prices have somewhat larger effects on transport and trade-related services. Under the central $86 scenario, higher fuel prices reduce Malawi’s national GDP by just 0.03% in 2027.

The fertilizer price shock is much larger. Fertilizer orders for Malawi’s upcoming growing season are largely completed by July, while the prevailing parallel exchange rate has been stable in recent months. Using average April-June world prices and the historical composition of Malawi’s fertilizer imports, we estimate that local fertilizer costs for the upcoming season were 61% above the prewar baseline.

Model results show that the resulting reduction in fertilizer use and crop yields lowers national GDP by 0.86% and agricultural GDP by 2.42% when combined with the fuel-price shock (Figure 2, Panel B).

Figure 2

How El Niño changes the outlook

We used this revised 2027 outlook as the reference point for assessing the additional, and considerably more uncertain, effects of El Niño, finding these are likely to further intensify Malawi’s economic woes, particularly in agriculture.

Historically, the impacts of strong El Niños on Malawi’s agricultural sector have varied significantly. Therefore, we model crop-yield scenarios based on Malawi’s experience during the five strongest El Niño events since 1980, defined as cropping seasons with the highest average Relative Oceanic Nino Index (RONI) values (Figure 3). For each historical analog, we generated yield anomalies for all crops cultivated in Malawi and overlayed these shocks on the combined fuel and fertilizer scenario, with impacts reported for 2027. Yield anomalies for major crops such as maize, tobacco, and pulses dominate the overall El Nino impacts. Finally, we calculated the average yield impact of the five analog years and used these values to run a sixth scenario.

Figure 3

Iran war impacts are estimated to reduce Malawi’s GDP by about 0.9% in 2027. When the El Niño crop shocks are layered onto this scenario, combined GDP losses range from 1.0% to 7.0% and average 2.9% (Figure 4, Panel A), while agricultural GDP losses average 8.1%, ranging from 2.7 to 19.6% (Figure 4, Panel B),

This wide range highlights the considerable uncertainty surrounding the potential impacts of El Niño: even events of similar measured intensity can affect Malawi very differently depending on the timing and spatial distribution of rainfall deficits and how these coincide with critical stages of crop growth. Nonetheless, even the milder scenarios suggest significant economic impacts.

Figure 4

These include higher domestic food prices and lower household expenditures. Domestic agricultural commodity prices rise by 5.4%-52.3% across the El Niño scenarios and 17.6% on average (Figure 5, Panel A), driven by reduced agricultural production resulting from increased input prices and poor rainfall. While international trade partially mitigates these modeled price effects, not all commodities are widely traded, while Malawi’s foreign exchange regime limits the availability of foreign currency to pay for imports.

Together with lower economic activity, these price increases reduce households’ purchasing power: average real household expenditure falls by an average 4.2% (Figure 5, Panel B), with outcomes ranging from a drop of 1.7% in the 1998 analog to 11.6% in the 1992 analog. Losses are larger for urban households (-7.5%) than rural households (-2.0%), as falling farm and nonfarm wages are partly offset in rural areas by higher returns to land as agricultural productivity falls and competition for land intensifies. There is no clear distributional pattern across income quintiles, although losses are smaller for middle-income households, reflecting greater land ownership among rural households in this group compared with their poorer counterparts.

Figure 5

These price and income effects have a significant impact on well-being. The average El Niño scenario suggests an additional 495,000 people fall into poverty (Figure 6, Panel A) and 4.6 million into undernourishment (Figure 6, Panel B). Poverty is measured using the international $3.00-a-day poverty line, while people consuming less than approximately 1,850 kcal per adult equivalent per day are treated as undernourished. In the baseline, 75.4% of Malawians (17.3 million people) are poor and 17.4% (4.0 million) are undernourished in 2027.

While undernourishment is not directly equivalent to acute food insecurity, the potential doubling of the undernourished population raises the possibility of large increases in the number of people requiring emergency food assistance in 2027—suggesting the importance of advance planning.

The Iran war shock accounts for about half of the increase in poverty (256,000 people), but only about one-fifth of the increase in undernourishment (1.0 million), with El Niño accounting for most of the latter. Impacts are also strongly rural: about half of those additionally falling into poverty and 87% of those becoming undernourished live in rural areas.

Figure 6

Regional maize trade

In the average El Niño scenario, maize imports increase nearly threefold as Malawi compensates for lower domestic production. As a sensitivity test, we assume regional maize prices rise by 25% following below-average regional production, constraining Malawi’s ability to import: maize imports then increase only twofold relative to the baseline. While this has little additional impact on GDP, average agricultural prices, real household expenditure, or poverty, it significantly worsens food security, pushing an additional 400,000 people into undernourishment and bringing the total number of additional undernourished people to around 5 million.

Conclusion

The outlook for Malawi is uncertain, but a strengthening El Nino and high fertilizer prices represent significant risks to 2027 crop production and food security. These forecasts highlight a window of opportunity for anticipatory planning that aims to prevent crop losses and soften economic impacts.

Up next in this blog series: a deeper dive into the early actions under consideration in Malawi.

Chris Hillbruner is Head of the Global Food Security Program in IFPRI’s Markets, Trade, and Institutions Unit; Karl Pauw is a Senior Research Fellow with IFPRI’s Foresight and Policy Modeling Unit; Weston Anderson is Climate Risk Assessments Co-Lead with NASA Harvest and an Assistant Research Professor at the University of Maryland. Opinions are the authors’.

This work was supported by the CGIAR Science Programs on Policy Innovations and Food Frontiers and Security.