Zambia’s Economy

Overview

The Zambian economy is set to grow at a rate of 2.7 percent in 2023 from 4.7 percent in 2022 a slowdown that can be attributed to contractions in the mining sector among other factors. GDP is expected to grow due to the restructuring of Zambia’s debt with China and the recovery process of the mining and manufacturing sectors coupled with advances in the Information Communication and Technology, transportation and financial services sectors respectively.

The restructuring of the countries sovereign debt is estimated by the IMF to save Zambia USD 7.65 billion by 2026. The 2023-2025 midyear budget plan predicts the Zambian economy to grow by 4.8 percent in 2024, an upward turn based on advances in macroeconomic conditions and the employment of reforms.

Numbers

In the first quarter of 2023 annual average inflation decreased to 9.6 percent as compared to 9.8 percent in the fourth quarter of 2022. The second quarter of 2023 saw an increase in inflation to 9.9 percent which further increased to 10.3 percent in the third quarter of the year. The reduction in the inflation rate was as a result of a slowing in food and non-food inflation, including fuels and lubricants. This was later overturned by the increase in maize grain prices, upward adjustment of electricity tariffs and tight global financial conditions. 

As at end of second quarter of 2023 the kwacha appreciated to ZMW 17.5 per USD from ZMW 19.5 per USD in the first quarter.

Commercial banks average lending rates increased from 25.5 percent in the first quarter of 2023 to 25.7 percent in the second quarter of 2023. Lending rates remained high due to market risk and tight liquidity conditions.

Government policy

Government is working towards increasing electricity generation capacity and promoting the use of alternative green and renewable energy sources. Growth in the energy sector is expected to average 0.3 percent over the medium term. Government has also continued the up-scaling of rural electrification initiatives to ensure that remote areas have increased access to electricity.

Government’s focus on stimulating growth by sustaining macroeconomic stability and ensuring the appropriate policies are in place to support private sector investment. Public Private Partnerships continue to be leveraged to finance the development of infrastructure and other projects.