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 hourglass is running out on possible refinancing negotiations as a downgrade action by S&P Global Ratings in February is set to narrow Zambia’s investor pool further. In light of government payment delays, which created a liquidity gap for suppliers, and weather-related supply-side constraints, the copper producer braces for another external-sourced shock to the terms of trade. Close direct trade ties to China and exposure to the risk-sensitive copper price suggest the COVID-19 outbreak may shave 0.1 ppt off Zambian growth this year. Meanwhile, rates reprieve at the first quarterly convention of the year aside, we expect monetary authorities to resume the tightening cycle by mid-year as severe cost-push pressures threaten to derail inflation expectations, adding to consumers’ woes. (Source: Zambia Quarterly Update, February 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) |
-1.7 |
|
Real GDP (annual % change) |
1.7 |
|
GDP per Capita, US$ |
1,342.3 |
|
Import Cover (months) |
2.0 |
|
Population, million |
17.9 |
| Total External Debt (as a % of GDP) |
86.9 |