In-Depth Analysis
Zambia
The copper producer’s growth prospects dimmed amid ongoing failure to secure an IMF bailout programme, inadequate fiscal consolidation, and high exposure to exogenous shocks due to a narrow export base. In addition to climate shocks (drought), Zambia is highly susceptible to demand shocks from China. The mining industry furthermore grapples with frequent changes to the tax code and a large power-supply shortfall.
The Covid-19 pandemic served as a catalyst to hasten the crumbling of the economic foundation that was slowly being chipped away by weak governance, an unsustainable debt burden, single-commodity dependence on copper, reliance on importing vital goods and a breakdown in business sentiment. The lack of fiscal space for targeted countercyclical policy response renders Zambia vulnerable to suffering a deeper and prolonged U-shaped growth trajectory and a weaker buoyancy of recovery. In Zambia, there has been some concern about the lack of political leadership during this time, as President Edgar Lungu has only addressed the nation three times since the virus surfaced in his country two months ago. Mr Lungu’s response to the pandemic will have a direct impact on his support in the 2021 elections, which had already been on the decline. We maintain our current political risk rating at moderate with the trend negative as Mr Lungu and his Patriotic Front prepare for the upcoming elections. (Source: Zambia Annual Country Profile, May 2020.)
Macroeconomic Data
(2019)
|
Fiscal Balance (as a % of GDP) |
-7.1 |
|
Consumer Price Index (% change y-o-y, avg) |
9.2 |
|
Current Account Balance (as a % of GDP) |
1.0 |
|
Real GDP (annual % change) |
1.7 |
|
GDP per Capita, US$ |
1,344.1 |
|
Import Cover (months) |
2.1 |
|
Population, million |
17.9 |
| Total External Debt (as a % of GDP) |
86.7 |