A modified Solow growth model is used to simulate the impact of the AIDS epidemic on output capacity and other key macroeconomic aggregates in Malawi. Comparing a counterfactual no-AIDS scenario to 'medium' and 'extreme' AIDS projections suggests that average real GDP growth over the 1985-2010 period will be 0.2-0.3 (1.2-1.5) percentage points lower in the medium (extreme) case, relative to the no-AIDS case. As a result, the size of the economy by the year 2010 will be reduced from a real GDP of 5.03 billion (constant 1985) Kwacha without AIDS to 4.81-4.77 (3.80-3.46) billion Kwacha in the medium (extreme) scenario.