In-Depth Analysis
Zambia
Boasting a wealth of natural resources, including an assortment of mineral deposits and substantial water supply capacity, the strength of Zambia’s external position and growth environment relies heavily on the performance of the copper sector. This is however a double-edged sword, as Zambia is highly susceptible to shocks to the terms of trade due to its dependence on copper and a narrow export base.
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 |