Zambia Economic Outlook

July 17, 2018

The economy lost traction in the first quarter, expanding 2.6% year-on-year compared to 4.1% in the previous quarter. Growth was primarily supported by a double-digit surge in mining and quarrying output, fueled by healthy demand for copper exports. Meanwhile, a sharp contraction in the agricultural sector owing to a pervasive drought was largely behind the slowdown. Prospects appear brighter for the second quarter: Overseas sales of copper shot up in May, with export earnings on the rise. Earnings have withstood pressure from the downward trend in copper prices stemming from intensifying trade war fears. Moreover, the PMI for June signaled a continued robust expansion in private sector activity amid stronger demand conditions.

Zambia Economic Growth

This year, the economy is expected to remain robust thanks to a healthy expansion in exports. A key challenge to the outlook, however, stems from rapidly rising external debt servicing costs against the backdrop of a weakening kwacha and dwindling foreign exchange reserves. FocusEconomics panelists expect GDP to grow 4.1% in 2018, which is down 0.2 percentage points from last month’s forecast, and 4.5% in 2019.

Zambia Economy Data

	2013	2014	2015	2016	2017
Population (million)	15.2	15.7	16.2	16.7	17.2
GDP per capita (USD)	1,801	1,661	1,046	1,293	1,563
GDP (USD bn)	27.5	26.1	17.0	21.6	26.9
Economic Growth (GDP, annual variation in %)	5.1	4.7	3.0	3.8	4.1
Industrial Production (annual variation in %)	3.9	1.9	0.2	2.5	-
Fiscal Balance (% of GDP)	-6.2	-5.7	-9.3	-5.8	-
Public Debt (% of GDP)	27.1	36.1	62.3	60.5	-
Money (annual variation in %)	11.8	11.3	24.9	0.1	20.7
Inflation Rate (CPI, annual variation in %, eop)	7.1	7.9	21.1	7.5	6.1
Inflation Rate (CPI, annual variation in %)	7.0	7.8	10.1	17.9	6.6
Policy Interest Rate (%)	9.75	12.50	15.50	15.50	10.25
Exchange Rate (vs USD)	5.55	6.40	11.00	9.93	10.01
Exchange Rate (vs USD, aop)	5.39	6.16	8.66	10.31	9.54
Current Account (% of GDP)	-0.8	2.2	-4.9	-4.3	-2.6
Current Account Balance (USD bn)	-0.2	0.6	-0.8	-0.9	-0.7
Trade Balance (USD billion)	0.0	-0.1	-1.4	-1.0	-0.6
Exports (USD billion)	10.6	9.7	7.0	6.5	8.1
Imports (USD billion)	10.6	9.8	8.5	7.5	8.7
Exports (annual variation in %)	10.0	-8.7	-27.3	-7.6	25.0
Imports (annual variation in %)	20.2	-7.5	-13.5	-11.0	15.7
International Reserves (USD)	2.7	3.1	3.0	2.4	2.1

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Zambia Facts

	Value	Date
Bond Yield	19.33	Jul 17
Exchange Rate	10.08	Jul 17
Stock Market	0.3	Jul 17

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