Recent Developments & Prospects
Economic Cooperation, Regional Integration & Trade
Economic & Political Governance
Public Sector Management, Institutions & Reform
Natural Resource Management & Environment
Thematic analysis: Structural transformation and natural resources
Author: Peter Engbo Rasmussen
- Zambia’s economy remains strong with growth expected to increase above 6% in 2015/16 after a decline in GDP growth from 6.7% in 2013 to 5.7% due mainly to waning copper production. Inflation is expected to fall below 7.0% by 2017.
- Governance and democratic processes continue to gather strength, with the recent presidential by-elections reinforcing Zambia’s status as a peaceful and stable country.
- Poverty, at over 60%, remains significant despite strong economic performance along the main transport corridors and reduced poverty in the large urban agglomerations.
Zambia’s economy performed relatively well within the region despite the decline in the growth rate. This decline was largely a result of lower production in the mining sector compared to the year before as well as slower growth in manufacturing and public services. Agriculture, on the other hand, put in a strong performance growing at over 6% as a result of a bumper maize harvest. Economic performance is expected to remain strong in the medium term driven by large investments in infrastructure and a growing public administration and defence.
Diversifying the economy away from dependence on copper and the creation of decent jobs remain the overarching policy goals of the government. Improving accountability and strengthening the fight against corruption also remain firmly on the government’s agenda. In 2014 there was some fiscal consolidation with the deficit falling by about one percentage point compared to 2013. This is expected to continue in the medium term with slower expenditure growth and improved fiscal and cash management. Productivity in the private sector needs to increase in order to improve competitiveness given the pressure for higher wages. The government has indicated that it will do more to expand skills and education while also accelerating interventions in health, water and sanitation in the coming year.
Economic development in Zambia has historically followed the rail lines that connect the Copperbelt in the north with Livingstone in the south through the capital city, Lusaka. More recently the main transport corridors have also provided an impetus for growth in the country. These corridors have benefited both Central and Eastern Province where there has been an influx of investments, creating a basis for further development. Spatial inclusion is addressed through the revised Sixth National Development Plan while an added benefit of industrial policy is the creation of multi-facility economic zones aimed at creating opportunities in the main urban agglomerations and attracting foreign investments.
Table 1: Macroeconomic indicators
|Real GDP growth||6.7||5.7||6.5||6.6|
|Real GDP per capita growth||3.5||2.5||3.3||3.3|
|Budget balance % GDP||-6.7||-5.5||-5.1||-4.9|
|Current account balance % GDP||0.7||0||0.6||0.3|
Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.