Zambia Economic Outlook

May 26, 2020

The economic fallout from Covid-19 continued to batter the economy in the second quarter, after activity likely contracted sharply in the opening quarter of the year amid lingering drought conditions. The PMI plummeted to a record low in April, as output, new orders and employment nosedived, while business sentiment soured, hinting at an unprecedented decline in private sector activity at the outset of Q2. Consumer demand seems to have been extremely hard hit, due to strict lockdown measures to contain the pandemic and a sharp currency depreciation though late May. On the external front, the picture is equally grim as low copper prices due to collapsing global demand seemingly depressed exports through May. Meanwhile, analysts are questioning whether the IMF will reject the request for support due to concerns that the countryâ€™s debt is unsustainable.

Zambia Economic Growth

The 2020 outlook worsened in May, with both domestic activity and the external sector set to contract this year due to Covid-19. Plummeting global demand and depressed commodity prices will likely hammer exports, while containment measures and a depreciating currency are expected to hamper domestic demand. A high risk of default due to spiraling debt also clouds the outlook. FocusEconomics panelists project GDP to contract 2.2% in 2020, which is down 1.1 percentage points from last monthâ€™s forecast. For 2021, the panel sees GDP growth at 1.6%.

Zambia Economy Data

	2014	2015	2016	2017	2018
Population (million)	15.7	16.2	16.7	17.2	17.8
GDP per capita (USD)	1,685	1,508	1,293	1,566	1,608
GDP (USD bn)	26.5	24.5	21.6	27.0	28.6
Economic Growth (GDP, annual variation in %)	4.7	2.9	3.8	3.5	4.0
Industrial Production (annual variation in %)	1.9	0.2	5.6	5.4	4.3
Fiscal Balance (% of GDP)	-5.7	-9.5	-6.1	-7.7	-8.3
Public Debt (% of GDP)	36.1	62.3	60.7	61.9	78.1
Money (annual variation in %)	11.3	24.9	0.1	20.7	15.4
Inflation Rate (CPI, annual variation in %, eop)	7.9	21.1	7.5	6.1	7.9
Inflation Rate (CPI, annual variation in %)	7.8	10.1	17.9	6.6	7.5
Policy Interest Rate (%)	12.50	15.50	15.50	10.25	9.75
Exchange Rate (vs USD)	6.40	11.00	9.93	10.01	11.94
Exchange Rate (vs USD, aop)	6.16	8.66	10.31	9.54	10.48
Current Account (% of GDP)	2.3	-2.3	-3.2	-1.6	-1.2
Current Account Balance (USD bn)	0.6	-0.6	-0.7	-0.4	-0.3
Trade Balance (USD billion)	1.7	0.2	0.2	1.0	0.5
Exports (USD billion)	10.2	7.4	6.5	8.2	9.0
Imports (USD billion)	8.6	7.2	6.3	7.3	8.5
Exports (annual variation in %)	-5.7	-28.0	-11.2	25.7	9.9
Imports (annual variation in %)	-6.9	-16.0	-12.5	15.2	17.4
International Reserves (USD)	3.1	3.0	2.4	2.1	1.6

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Zambia Facts

	Value	Date
Bond Yield	33.00	Dec 31
Exchange Rate	14.09	Jan 01
Stock Market	0.3	Jan 06

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