Economic Outlook

The services sector plays a significant role in the growth and development of the Zambian economy, contributing 59% of GDP, followed by industry and agriculture, which make up 35.6% and 5.4% of GDP respectively. Trade also plays an essential role in the economic growth of Zambia. Trade in goods and services contributed about 72% to GDP in 2017, with copper as a major export. In 2015 economic activity was at its lowest in decades reaching 2.9 % owing much to low copper prices and the 2015 El Nino drought. However, the country experienced a rebound in economic growth in 2016 to 3.4%, which is expected to increase to 4% in 2018 due to the rising demand for copper, mainly by China.

Inflation reached 18.2% in 2016 but later returned to a single digit after the Central Bank adopted a tight monetary policy, raising monetary policy rate to 15.5 % thereby reducing market liquidity. The government has embarked on an Economic Stabilisation and Growth Programme which is expected to help reduce the budget deficit from 6% in 2016 and help improve economic growth. The programme will also help in reducing public debt which had reached 61% of GDP, causing adverse effect of dampening the growth of credit to the private sector.

Potential Opportunities

According to the IMF, Zambia is at a high risk of debt distress posing a challenge to economic growth and development. However, with a population of 17.24 million in 2017 that is expected to grow to 18.32 million in 2019, a GDP of US$25.58 billion in 2017, which is expected to increase to about US$28.24 billion in 2019 and a GDP per capita income of US$1,484 in 2017, projected to increase to US$1,542 in 2019, Zambia provides a growing market for exporters and investors.

The country also offers opportunities for export diversification to SADC, SACU, COMESA, Africa, the UK and the US market under the Africa Growth Opportunity Act (AGOA). Besides Zambia’s volume of imports of goods and services expected to decrease from 10.77% in 2017 to 5.77% in 2019, its volume of exports of goods and services is expected to grow from 5.12% in 2017 up to about 7.13% in 2019, showing the potential for export expansion.

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