Impact of the 2026 Iran War on Malawi: an economy‑wide perspective

The 2026 Iran War closed the Strait of Hormuz, which handles about one-fifth of the world’s seaborne oil and fertilizer trade. Using a Computable General Equilibrium (CGE) model calibrated to Malawi’s 2022 Nexus Social Accounting Matrix (SAM) and linked to a nationally representative household survey, we quantify the impacts of the resulting fuel and fertilizer price increases. Because Malawi imports refined products rather than crude, we pass the observed 45% rise in the world crude price through refining and freight cost shares, giving import price increases of 34% for fuel and 35% for fertilizer. Nominal GDP at factor cost falls between 4.9% and 5.2%, import volumes contract between 8.4% and 8.9% and the parallel exchange market premium rises between 11.7 and 12.9% points. Between 426,000 and 459,000 additional people fall into poverty, concentrated among rural farm households. Government savings are unchanged, but revenue composition shifts towards indirect taxation, and sales-tax financing is marginally less distortionary than raising import tariffs.