Outlook for 2011-12
Monthly review
The first half of the forecast period will be dominated by the elections, which are likely to take place in mid-2011. Political squabbling will intensify but stability will remain intact. Following months of discord, the alliance between the two largest opposition parties-the Patriotic Front (PF) and the United Party for National Development (UPND)-has ended. Despite this, the elections are likely to be closely contested and could result in a transfer of power from the president, Rupiah Banda, and the ruling Movement for Multiparty Democracy (MMD) to the PF and its leader, Michael Sata. Mr Sata's nationalist rhetoric has raised some concern in the past, but he is highly unlikely to depart radically from the MMD's fairly pragmatic policy agenda. Following the elections the government's focus is likely to revert to policy. A referendum is expected in 2012 on changing presidential elections from the first-past-the-post system to one in which the winning candidate would require more than 50% of the vote. A fragmented opposition would then no longer guarantee victory for the ruling party. The population is widely expected to approve the change. Labour unrest and demands for higher wages could increase in the run-up to the elections. Stability is likely to be maintained as the government intervenes to quell any unrest, although underlying discontent will persist.
The presidential and parliamentary elections are likely to be closely contested. The MMD will benefit from the advantages of incumbency and its formidable electoral machinery. However, the PF and Mr Sata should put up a strong challenge to the MMD; Mr Sata narrowly lost the 2008 election and his popularity has grown as public discontent with the government has increased. A controversial reversal of his position on mining taxes-Mr Sata previously advocated higher mining taxes, but now supports a stable tax regime-has not dented his popularity. Following the collapse of the PF-UPND alliance, voter turnout could fall: the electorate is disillusioned with the MMD but is also disenchanted with the opposition's enduring failure to offer a united front against it. In line with recent trends, the vote itself is expected to be free and fair, but the run-up to voting will be marred by bias in the state-owned media and the incumbents' use of public resources to fund their campaigns. Some election-related violence could occur, especially if the government sticks by its decision to ban parallel vote tabulation (whereby polling booths are monitored to ensure that the results announced at individual polling stations are consistent with the nationwide result), which would entrench the opposition's suspicions of electoral fraud. However, any violence would be limited in scale, and its implications for national stability and investment would be small.
Zambia is not expected to face any external threats over the forecast period. Donors will continue to provide budget support, but further suspensions of aid could take place if additional evidence of corruption and mismanagement emerges. The government will remain resentful about what it sees as donors impinging on its sovereignty, but will make some effort to address their concerns in order to maintain its access to aid. Chinese loans and investment by Chinese companies will continue to rise steadily, although Western donors will remain the largest source of aid.
The policy agenda will be underpinned by the Sixth National Development Plan (SNDP; 2011-15), the medium-term expenditure framework (2011-13) and the extended credit facility with the IMF (2008-11). Despite the impending elections, a high degree of policy continuity is expected in 2011-12 as strong public pressure to promote job creation ensures that economic policies stay pragmatic. The government is therefore expected to stick to a market-orientated agenda and remain committed to macroeconomic stability. Infrastructure will improve as large investments are made in power supply and roads, increasingly through public-private partnerships, but constraints will persist. Fertiliser subsidies and price support for maize will continue to account for almost half of the agriculture budget. There are numerous flaws in the subsidy scheme-targeting is poor; a blanket support scheme for maize is inappropriate given that Zambia has three agro-ecological zones, each suited to different crops; the impact on productivity has been weak given the scheme's costs-but its political appeal will deter the government from making substantial changes. The generous fiscal incentives on investments of over US$500,000 in the so-called "priority sectors" are likely to be largely retained. This will boost investment in manufacturing, tourism and energy, but not enough to change the structure of the economy significantly. Despite strong public pressure, the mining tax regime is unlikely to be changed in 2011-12 following a recent agreement with mining firms. Skills development has been aptly identified as a priority under the SNDP. If tackled effectively, this could lower unemployment, which is officially estimated at 14%. Policy implementation has historically been weak, but there are grounds for cautious optimism, particularly as private investment in education is encouraged.
Fiscal policy in 2011-12 will be expansionary, with expenditure forecast to rise by an average of 17.2% per year. The government plans to implement a shift from public consumption to public investment; with the former projected to grow by 11% per year (on average) and the latter by 38%. This will not be fully achieved. The current spending target is premised on efficiency improvements and tighter controls on wages, which demand a level of political will that is lacking. Furthermore, another maize surplus is expected in 2011. This is likely to lead to excess spending by the Food Reserve Agency, once again, as it continues to buy maize from farmers at above-market prices. Conversely, capital spending is likely to be lower than projected as delays occur in the implementation of infrastructure projects. Despite this, some shift towards public investment is expected and its share of expenditure is forecast to rise from 22% in 2010 to 26% in 2012. In 2011 education has been allocated the largest share of the budget (18.6%), followed by transport (mostly roads; 16.1%), health (8.6%), defence (7.2%) and agriculture (6%). A similar pattern is expected in 2012.
The government's target for domestic revenue growth in 2011-12 (17%) is likely to be achieved as the economy grows robustly and arrears from mining are collected. Grants are set to finance only 7.5% of the budget, partly because of economic difficulties in the West. The fiscal deficit is forecast to rise to 3.8% of GDP in 2011 as grants fall and election-related spending increases; and to 4.3% of GDP in 2012 as infrastructure spending rises. The deficits will be comfortably financed by domestic borrowing, external concessional finance and the US$500m sovereign bond issue expected in late 2011. Public debt is forecast to rise from 26.9% of GDP in 2010 to 28.4% of GDP in 2011-12, but the government's debt-servicing capacity is expected to stay intact.
A key priority of the Bank of Zambia (BoZ), the central bank, is to maintain price stability. Over the long term the BoZ plans to shift from setting monetary aggregate targets to setting a policy interest rate. However, the transmission mechanism between the interbank rate and commercial banks' lending rates is weak, and this shift is unlikely to occur in 2011-12. Demand-side management will remain strong, but this will not guarantee price stability, as prices will continue to be shaped by supply-side factors-particularly food production. The BoZ will remain committed to an exchange rate that reflects market fundamentals, but will intervene in foreign-exchange markets to prevent undue volatility in the kwacha. Despite this, the exchange-rate is likely to stay fairly volatile because of the economy's dependence on copper.
International assumptions summary | ||||
(% unless otherwise indicated) | ||||
2009 | 2010 | 2011 | 2012 | |
Real GDP growth | ||||
World | -0.7 | 4.9 | 4.3 | 4.2 |
OECD | -3.5 | 2.9 | 2.5 | 2.3 |
EU27 | -4.2 | 1.8 | 1.9 | 1.7 |
Exchange rates | ||||
¥:US$ | 93.7 | 87.9 | 81.8 | 81.0 |
US$:€ | 1.393 | 1.326 | 1.365 | 1.295 |
SDR:US$ | 0.646 | 0.652 | 0.637 | 0.648 |
Financial indicators | ||||
€ 3-month interbank rate | 1.23 | 0.84 | 1.33 | 1.88 |
US$ 3-month Libor | 0.69 | 0.34 | 0.41 | 0.79 |
Commodity prices | ||||
Oil (Brent; US$/b) | 61.9 | 79.6 | 101.0 | 85.0 |
Gold (US$/troy oz) | 973 | 1,225 | 1,367 | 1,233 |
Copper (US cents/lb) | 234 | 345 | 442 | 465 |
Industrial raw materials (% change in US$ terms) | -25.6 | 44.5 | 28.0 | -10.7 |
Note. Regional GDP growth rates weighted using purchasing power parity exchange rates. |
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Real GDP growth is expected to stay robust, at 7% in 2011 and 7.2% in 2012. Agriculture is forecast to grow by an average of 6% as producers of maize continue to receive subsidies and as the country's vast tracts of uncultivated arable land attract an influx of foreign direct investment (FDI). The sector has the potential to grow even more rapidly-productivity is low (maize yields are less than half the global average) and there is abundant fertile land and water-but this would require fresh thinking on agricultural policies, which is unlikely over the short term. Manufacturing will lack dynamism, although growth will pick up as fiscal incentives boost investment. Mining will continue to grow rapidly as buoyant copper prices keep investment high. Construction is forecast to grow by 15.8%, underpinned by investments in mining, public spending on infrastructure and the construction of houses. Services are forecast to grow by 5% as strong domestic demand sustains growth in telecoms and financial services. Standards of living are expected to rise, but not in proportion to GDP growth, as a substantial share of income from the largely foreign-owned mines is repatriated. This drives a wedge between GDP and gross national product, which is more closely related to household income.
Strong domestic food production will offset higher oil prices, allowing inflation to moderate. Domestic food production will remain the main influence on prices; food accounts for more than 50% of the consumer basket and Zambia's landlocked status and poor transport infrastructure inflate the price of food imports. The supply of the staple food, maize, is expected to exceed demand in 2011-12 as farmers continue to receive generous subsidies. Electricity prices are expected to increase by around 15% in 2011 and 10% in 2012 as tariffs are raised towards full cost-recovery levels, although this is less rapid than in 2009-10, when tariffs went up by 30% per year. Imported inflation will rise as the kwacha depreciates slightly. Oil prices are forecast to grow by 27% in 2011 and to fall by 16% in 2012. In line with these trends, non-food inflation is likely to remain in double digits. Overall, average inflation is forecast at 8.4% in 2011 and 7.2% in 2012. Prices could climb far more quickly if drought were to reduce food production. There is one other caveat here: Zambia's inflation data are based on consumption patterns in 1994, as the consumer price index has not been rebased since then. However, as income levels have grown, food's share of the consumption basket will have fallen. Food inflation is currently much lower than non-food inflation-in 2010 the former was 5.3% and the latter 11.8%-so inflation estimates could well be understating actual increases in the cost of living.
In 2010 the kwacha appreciated by 4.9% as copper prices rose by more than 45%. In 2011-12 the kwacha is forecast to depreciate marginally as copper prices continue to rise, but much less rapidly than in 2010. Foreign-exchange inflows will be boosted by strong copper output, an increase in public borrowing for large infrastructure projects and heavy FDI inflows. These will be offset by buoyant import demand, a limited recovery in aid and a stronger US dollar in 2012. Overall, the kwacha is forecast to depreciate by 2.8% to ZK4,932:US$1 in 2011 and by 5% to ZK5,181:US$1 in 2012 as the growth in copper prices slows further.
Exports will grow robustly, albeit at a slower rate than in 2010, as copper production rises but price growth decelerates. Growth in non-traditional exports will be supported by fiscal incentives but their contribution to exports will remain very small. Import demand will stay strong as FDI inflows and public spending on infrastructure boost capital goods imports, although this will be partly offset by lower oil prices in 2012. The invisibles deficit will worsen as growth in tourism is outweighed by higher profit remittances from mining and a rise in services debits (in line with goods imports). Transfer inflows will decline in 2011 but recover slightly in 2012, in line with aid inflows. Overall, the current account is forecast at a surplus of 2% of GDP in 2011 (as copper prices rise by a further 28%) and a deficit of 3.7% of GDP in 2012 (as copper prices rise by just 5% and imports are boosted by a sharp increase in public investment). The deficits are likely to be financed comfortably by FDI and external borrowing.
Forecast summary | ||||
(% unless otherwise indicated) | ||||
2009a | 2010b | 2011c | 2012c | |
Real GDP growth | 6.3b | 7.6 | 7.0 | 7.2 |
Gross industrial growth | 5.4b | 11.2 | 10.4 | 11.7 |
Gross agricultural production growth | 6.0b | 9.0 | 7.0 | 5.0 |
Consumer price inflation (av) | 13.4 | 8.5a | 8.4 | 7.2 |
Consumer price inflation (end-period) | 9.9 | 7.9a | 6.5 | 6.3 |
Lending interest rate (av) | 22.1 | 20.9a | 19.4 | 18.5 |
Government balance (% of GDP) | -3.4b | -3.2 | -3.8 | -4.3 |
Exports of goods fob (US$ m) | 4,319.0 | 7,181.2 | 9,441.0 | 10,864.6 |
Imports of goods fob (US$ m) | 3,413.0 | 4,675.8 | 6,405.9 | 8,423.7 |
Current-account balance (US$ m) | -404.0 | 463.9 | 392.6 | -755.4 |
Current-account balance (% of GDP) | -3.0b | 2.7 | 2.0 | -3.7 |
External debt (year-end; US$ bn) | 3.0b | 3.4 | 4.1 | 4.8 |
Exchange rate ZK:US$ (av) | 5,046 | 4,797a | 4,932 | 5,181 |
Exchange rate ZK:¥100 (av) | 5,385 | 5,459a | 6,033 | 6,396 |
Exchange rate ZK:€ (av) | 7,029 | 6,360a | 6,731 | 6,709 |
Exchange rate ZK:SDR (av) | 7,815 | 7,355a | 7,749 | 7,996 |
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts. |
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In early April the two Chinese managers who shot and wounded 11 miners at the Collum coal mine in Southern province during a protest over pay (December 2010, The political scene) were acquitted. This followed the state prosecutor's decision to drop the charges against them, reportedly because witnesses could not be found to testify in the case. This was unsurprising: George Chisanga, the lawyer who represented the managers, was cited in the international press as saying that the government had brokered agreements with the wounded miners not to pursue the issue. Furthermore, the owners of the mine reportedly tripled miners' wages after the incident, and there is speculation that the compensation offer of ZK375m (US$79,620) to the victims of the shooting was linked to the condition that managers be exempt from trial.
The acquittal will entrench longstanding concerns that the government is not willing to rise to the task of regulating Chinese investors. This applies to the broader issues of pay, safety standards and working conditions at Chinese-owned mines and factories, which are widely considered to be unsatisfactory. The government's reluctance to enforce higher standards reflects the difficulties of regulating investors with a large financial presence-a phenomenon that extends well beyond Zambia. China is now the largest source of foreign direct investment (FDI) to Zambia and is the only major source of investment to the country other than South Africa. Chinese firms have large stakes in the mining and manufacturing sector, and Zambia's first Multi Facility Economic Zone, Chambishi, has been developed by a Chinese company. Furthermore, China has emerged as a major investor in the power sector: Chinese firms have a 65% stake in the US$1.5bn, 600-mw Kafue Gorge Lower project, which is expected to come on stream in 2017, and China's Exim Bank is financing roughly 70% of the 360-mw Kariba North Bank expansion. Together, these projects are expected to raise Zambia's total power-generation capacity by over 50%.
The acquittal will also have stoked discontent with the ruling Movement for Multiparty Democracy (MMD). However, this will have primarily affected better-informed urban Zambians and residents of Copperbelt province, where most Chinese-owned mines and factories are located. These groups already tend to support the opposition. The acquittal may also have damaged the MMD's popularity in Southern province, but this will have been restricted to the area where the mine is located. Its electoral implications will therefore be limited. Indeed, recent trends suggest that as long as the MMD can keep winning elections on the back of its rural support base-65% of Zambia's population is rural-the electoral impetus for improving standards at Chinese-owned firms will be weak.
As expected, Mr Banda was elected-unopposed-as leader of the MMD at the party's convention in April, and was endorsed as its presidential candidate for the election due later this year. Following weeks of bickering over the post of party vice-president, which has been vacant since 2005 (September 2005, The political scene), the position was scrapped entirely at the convention. The MMD national chairman, Michael Mabenga-another ally of Mr Banda's-is now the second most powerful person in the party. The decision to scrap the post may have been cemented by the announcement by Patrick Musonda, the former MMD youth chairman, that he would contest it. This would have pitted Mr Musonda against the national vice-president, George Kunda, who was believed to be Mr Banda's favoured candidate for the position. Mr Musonda was subsequently suspended from the party on April 7th on charges of indiscipline.
Mr Banda has emerged from the convention in a strong position. Most posts within the party's decision-making body-the National Executive Committee (NEC)-have been filled by his allies. However, this has come at the cost of a decline in intra-party democracy. A number of the president's allies-including the minister of finance and national planning, Situmbeko Musokotwane; the minister of commerce, trade and industry, Felix Mutati; and Mr Mabenga-were elected unopposed to the NEC. This was in contrast to previous conventions, where competition for key posts has been intense, and may well have reflected the fate that has awaited all those who have challenged the president in recent months. In particular, a number of high-profile MMD members-the highly successful former finance minister, Ng'andu Magande; the former defence minister, George Mpombo, and the former minister of works and supply, Mike Mulongoti-have recently been expelled either for questioning the NEC's decision to declare Mr Banda as the party's candidate without a vote (October 2010, The political scene) or contesting key positions (March 2011, The political scene). Indeed, at the convention, Mr Banda called for discipline and unity within the party and warned that all "traitors" would be punished.
Concerns that the MMD would fragment and that policy implementation would suffer as a result (April 2011, The political scene) have been allayed for the moment. However, there is still some risk that defections will occur once the NEC selects candidates for the parliamentary elections, as those who are not selected may leave the MMD to contest the elections as independents.
An ongoing disagreement over the use of parallel vote tabulation (PVT) in the upcoming elections has pitted the government against civil society groups and the opposition. PVT involves the monitoring of polling booths to ensure that the results announced by the electoral commission at individual polling stations are consistent with the nationwide result. Mr Banda has declared that PVT will not be permitted and asserted that it would be a "recipe for post-election anarchy". This has been strongly contested by civil society groups. Sam Mulafulafu, the executive director of one such group, Caritas Zambia, says that PVT would enhance the credibility of the election by assuring voters that ballot boxes had not been tampered with; unless they had in fact been tampered with, in which case PVT could not be blamed for any consequent unrest. Mr Mulafulafu also points out that PVT has, in effect, been used in Zambia before: the Electoral Commission of Zambia (ECZ) has been publishing results at each polling station since 2006, enabling any interested group to collate the results independently.
Mr Banda's concerns may reflect the decision of the main opposition party, the Patriotic Front, to train 12,000 poll monitors to conduct PVT. The opposition cannot be relied on to deliver an objective assessment any more than the ECZ can. The declaration of alternative-and quite possibly, spurious-results by the opposition could indeed cause confusion and stoke unrest. However, banning PVT would not prevent this, as indicated by the numerous occasions on which the opposition has contested election results in the past. Furthermore, there is little basis for preventing independent civil society groups from conducting PVT.
It remains unclear whether the government will relent on demands for PVT. Civil society groups may go ahead with it regardless, especially as the Law Association of Zambia has said that PVT is not illegal. If the government were to prevent it, this would only cement concerns about the election's credibility, raising the risk of election-related violence. However, a sustained deterioration in political stability would remain unlikely: politically related violence in Zambia has been limited in scale even when animosity has been high.
In late March Evans Mauta, a manager at Zambia's sole oil refinery-the 36-year-old state-owned Indeni refinery-said that the government would make a decision on its future by end-2011. The refinery was previously run as a joint venture with a French firm, Total, which owned a 50% stake in it. In 2009 Total pulled out of the venture, partly because of government controls on fuel prices (December 2009, Economic performance). At the time, the government said that it would re-sell Total's stake within a few months. However, in February 2010 it decided to put its plans on hold.
There are strong economic grounds for the government to shut Indeni down entirely and import refined oil instead. In a presentation at the Economics Association of Zambia in February, Alan Whitworth, from the Zambia Institute for Policy Analysis and Research, asserted that inefficiencies in the following have meant that fuel prices in Zambia are among the highest on the continent:
Mr Whitworth argued that the Indeni refinery was only sustained through tariff protection: refined oil is charged a tariff of 25%, while crude is charged only 5%, allowing Indeni to sell fuel at up to 20% more than the price of imported, refined fuel. Furthermore, despite this, the refinery is loss-making and relies on public subsidies. Although shutting down Indeni may be the best option for consumers, the government is unlikely to opt for this, partly because the refinery is an important source of employment in Ndola-Zambia's third largest city and the commercial capital of the Copperbelt.
In April government officials announced that production of the staple food, maize, was expected to rise by 10-25% in 2011. This comes on the back of two consecutive bumper harvests that have seen maize output rise by an average of 40% per year to well above the domestic consumption requirement. The harvests have been underpinned by good rains-agriculture in Zambia remains almost entirely rain-fed-and a large scaling-up of the Farmer Input Support Programme (FISP) under which subsidised fertiliser and seed are distributed to maize producers.
Another bumper harvest in 2011 would raise farmers' incomes, help keep food prices in check and support economic growth. However, a larger maize surplus would also exacerbate the challenges that the state-owned Food Reserve Agency (FRA) has faced in recent years in collecting maize from farmers, storing it and exporting it (especially in the face of competition from cheap South African maize). This has led to large spending overruns by the FRA in 2009 and 2010. In 2009 the poor rural road network meant that many farmers were unable to take their surplus maize to selling depots. This forced the FRA to collect it from them in what turned out to be an expensive exercise. In 2010 the FRA purchased maize from farmers at above-market prices and has since been exporting it at a loss (November 2010, Economic performance). Further spending overruns by the FRA are expected in 2011.
In addition, although the FISP has allowed maize output to rise sharply, it has numerous flaws. It is marred by severe leakages, has had a small impact on productivity given its costs and is inappropriate for a country that has three distinct agro-ecological zones, each suited to the production of different crops. The scheme consumes roughly 40% of the agriculture budget, some part of which could well be better spent on water management (Zambia's vast freshwater resources mean that there is huge potential here) and extension services. However, the scheme's political appeal will deter the government from making substantial changes in 2011-12.
In late March Standard & Poor's (S&P) followed Fitch and gave Zambia a B+ sovereign credit rating with a stable outlook. This is a non-investment grade rating but places Zambia on a par with Kenya, Angola, Ghana and Nigeria-whose ten-year, US$500m debut international bond, issued in January 2011, was 2.5 times oversubscribed. S&P's assessment of Zambia's creditworthiness is very similar to that offered by Fitch (March 2010, Economic performance). It notes that Zambia's macroeconomic fundamentals are strong but are highly vulnerable to shocks in copper prices. S&P also notes that the stable outlook on its rating reflects the view that the elections later this year will not be followed by a radical change in the policy agenda. The Economist Intelligence Unit concurs with this, as despite the nationalist rhetoric of the opposition front-runner, Michael Sata, strong public pressure to promote job creation is likely to ensure that he would largely stick to the pragmatic economic agenda of the current government if he were to win.
The two ratings have paved the way for the US$500m sovereign bond that Zambia plans to launch later this year. The proceeds from this will be used to finance investments in infrastructure. Earlier in March, while speaking at the Reuters Africa Investment Summit, the president, Rupiah Banda, said that he hoped that the bond would be issued before the elections, due in September 2011 (although likely to take place before then). Mr Banda's chief economic adviser, Kumendo Chembe, said that the government hoped to price the bond in the same range as Ghana's ten-year, US$750m Eurobond. This was issued with a coupon rate of 8.5% in 2007 and was heavily oversubscribed. Strong demand for the bond has pushed up its price on the secondary market and lowered the yield to roughly 6.5%.
A number of analysts have said that the ratings could also enable companies in Zambia to borrow abroad, thereby bringing down lending rates, which currently average roughly 19%. We think that any such effect is likely to be limited for the reasons given below.
The Copperbelt Energy Corporation (CEC)-the privately owned distributor of power to the copper mines-has announced plans to invest over US$900m in the development of five hydropower stations that would add 800 mw to Zambia's power-generating capacity by 2018. Prior to the CEC's announcement, total installed capacity was set to rise by 64%, from 1,800 mw currently to 2,960 mw in 2017 as the Kafue Gorge Lower and other power projects are implemented (April 2011, Economic policy). The CEC's investments would raise installed capacity by a further 27%, to 3,760 mw by 2018. This means that installed capacity would probably outstrip peak power demand, which is forecast at 3,300 mw in 2018 (assuming that demand for power grows by 10% per year).
If transmission and distribution (T&D) losses were reduced from their current rate of 20.2% to the global average of 8%, the supply of power would exceed demand in 2018. This would allow Zambia to export a sizeable power surplus through the Southern African Power Pool, which connects the power grids of 12 countries in the region. However, this is conditional on the planned power projects being implemented on time, which is far from assured. Furthermore, although T&D losses are likely to fall-as the Energy Regulation Board puts pressure on the state-owned electricity utility, Zesco, to improve efficiency-a goal of 8% will be difficult to achieve. Despite these caveats, the outlook for the power sector is positive. This is underpinned by Zambia's immense hydropower potential, which is estimated at 6,000 mw, and a recent decision by the government to add electricity generation to the list of "priority sectors" that are eligible for generous fiscal incentives (April 2011, Economic policy).
2006a | 2007a | 2008a | 2009b | 2010b | 2011c | 2012c | |
GDP | |||||||
Nominal GDP (US$ m) | 10,702 | 11,541 | 14,705 | 13,558 | 16,879 | 19,364 | 20,251 |
Nominal GDP (ZK bn) | 38,561 | 46,195 | 55,079 | 68,413 | 80,973 | 95,507 | 104,920 |
Real GDP growth (%) | 6.2 | 6.2 | 5.7 | 6.3 | 7.6 | 7.0 | 7.2 |
Expenditure on GDP (% real change) | |||||||
Private consumption | -1.2 | 2.1 | 4.0 | 5.5 | 6.0 | 5.8 | 5.6 |
Government consumption | 25.5 | 27.2 | 10.3 | 8.0 | 11.0 | 11.5 | 10.4 |
Gross fixed investment | 11.0 | 9.0 | 8.0 | 2.0 | 12.0 | 11.0 | 14.0 |
Exports of goods & services | 21.0 | 21.2 | 17.6 | 13.6 | 19.3 | 12.8 | 13.8 |
Imports of goods & services | 14.3 | 16.2 | 13.9 | 10.6 | 16.4 | 11.8 | 12.8 |
Origin of GDP (% real change) | |||||||
Agriculture | 2.2 | 2.2 | 4.6 | 6.0 | 9.0 | 7.0 | 5.0 |
Industry | 9.1 | 10.2 | 6.2 | 5.4 | 11.2 | 10.4 | 11.7 |
Services | 6.7 | 11.0 | 5.7 | 2.0 | 5.1 | 5.0 | 5.0 |
Population and income | |||||||
Population (m) | 12.0 | 12.3 | 12.6 | 12.9 | 13.2 | 13.5 | 13.8 |
GDP per head (US$ at PPP) | 1,211 | 1,292 | 1,361 | 1,424 | 1,517 | 1,613 | 1,737 |
Fiscal indicators (% of GDP) | |||||||
Public-sector revenue | 21.6 | 23.0 | 22.3 | 18.4 | 19.1 | 18.3 | 19.4 |
Public-sector expenditure | 23.2 | 24.3 | 23.8 | 21.8 | 22.3 | 22.1 | 23.6 |
Public-sector balance | -1.7 | -1.3 | -1.5 | -3.4 | -3.2 | -3.8 | -4.3 |
Net public debt | 31.0 | 28.5 | 28.4b | 25.8 | 26.9 | 27.8 | 29.2 |
Prices and financial indicators | |||||||
Exchange rate ZK:US$ (end-period) | 4,407 | 3,845 | 4,832 | 4,641a | 4,796a | 5,143 | 5,259 |
Exchange rate ZK:€ (end-period) | 5,815 | 5,615 | 6,717 | 6,651a | 6,513a | 6,789 | 6,679 |
Consumer prices (end-period; %) | 8.2 | 8.9 | 16.6 | 9.9a | 7.9a | 6.5 | 6.6 |
Stock of money M1 (% change) | 54.1 | 14.5 | 30.2 | -0.4a | 40.6a | 23.0 | 24.0 |
Stock of money M2 (% change) | 44.3 | 25.2 | 23.2 | 7.6a | 30.6a | 75.2 | 24.9 |
Lending interest rate (av; %) | 23.2 | 18.9 | 19.1 | 22.1a | 20.9a | 19.4 | 18.5 |
Current account (US$ m) | |||||||
Trade balance | 1,293 | 899 | 408 | 906a | 2,505 | 3,035 | 2,441 |
Goods: exports fob | 3,929 | 4,510 | 4,962 | 4,319a | 7,181 | 9,441 | 10,865 |
Goods: imports fob | -2,636 | -3,611 | -4,554 | -3,413a | -4,676 | -6,406 | -8,424 |
Services balance | -359 | -642 | -607 | -464a | -749 | -1,223 | -1,781 |
Income balance | -1,169 | -1,486 | -1,399 | -1,362a | -1,686 | -1,749 | -1,797 |
Current transfers balance | 362 | 531 | 560 | 516a | 393 | 329 | 392 |
Current-account balance | 127 | -698 | -1,038 | -404a | 464 | 393 | -745 |
External debt (US$ m) | |||||||
Debt stock | 2,277 | 2,755 | 2,986 | 3,044 | 3,430 | 4,064 | 4,773 |
Debt service paid | 751 | 121 | 170 | 188 | 205 | 214 | 236 |
Debt service due | 801 | 131 | 178 | 203 | 205 | 214 | 236 |
International reserves (US$ m) | |||||||
Total international reserves | 720 | 1,090 | 1,096 | 1,892a | 2,094a | 2,645 | 3,335 |
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts. | |||||||
Source: IMF, International Financial Statistics. |
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2009 | 2010 | |||||||
1 Qtr | 2 Qtr | 3 Qtr | 4 Qtr | 1 Qtr | 2 Qtr | 3 Qtr | 4 Qtr | |
Prices | ||||||||
Consumer prices (1994=100) | 148 | 152 | 156 | 159 | 163 | 166 | 168 | 171 |
Consumer prices (% change, year on year) | 14.3 | 14.4 | 13.8 | 11.2 | 9.8 | 8.7 | 8.1 | 7.4 |
Copper, LME (US$/tonne) | 3,429 | 4,663 | 5,859 | 6,649 | 7,232 | 7,027 | 7,243 | 8,636 |
Financial indicators | ||||||||
Exchange rate ZK:US$ (av) | 5,336 | 5,308 | 4,874 | 4,667 | 4,627 | 4,919 | 4,934 | 4,709 |
Exchange rate ZK:US$ (end-period) | 5,589 | 5,167 | 4,723 | 4,641 | 4,704 | 5,156 | 4,846 | 4,796 |
Deposit rate (av; %) | 6.59 | 6.97 | 7.40 | 7.40 | 7.40 | 7.40 | 7.40 | 7.40 |
Weighted lending base rate (av; %) | 20.86 | 21.58 | 22.85 | 22.97 | 22.66 | 21.28 | 20.18 | 19.54 |
Treasury bill, 91-day rate (av; %) | 15.98 | 16.08 | 16.93 | 12.59 | 6.40 | 4.35 | 7.01 | 7.34 |
M1 (end-period; ZK bn) | 4,270 | 4,372 | 4,871 | 4,962 | 5,322 | 7,331 | 6,397 | 6,978 |
M1 (% change, year on year) | 18.5 | 6.1 | 7.0 | -0.4 | 24.6 | 67.7 | 31.3 | 40.6 |
M2 (end-period; ZK bn) | 12,891 | 12,951 | 13,410 | 13,845 | 14,377 | 16,262 | 17,734 | 18,080 |
M2 (% change, year on year) | 26.1 | 21.2 | 20.0 | 7.6 | 11.5 | 25.6 | 32.2 | 30.6 |
Sectoral trends | ||||||||
Copper in concentrates, production ('000 tonnes) | 170.9 | 168.4 | 178.1 | 175.9 | 193.7 | 199.6 | 228.4 | 197.5 |
Copper in concentrates, exports ('000 tonnes) | 153.3 | 157.7 | 186.9 | 177.5 | 198.2 | 194.2 | 222.0 | 208.2 |
Foreign trade (US$ m) | ||||||||
Exports fob | 665.1 | 908.1 | 1,338.6 | 1,385.6 | 1,668.2 | 1,763.7 | 1,766.7 | 2,040.9 |
Imports cif | -754.9 | -907.0 | -966.3 | -1,148.1 | -1,241.1 | -1,271.5 | -1,260.7 | -1,308.4 |
Trade balance | -89.8 | 1.1 | 372.3 | 237.5 | 427.1 | 492.2 | 506.0 | 732.5 |
Foreign reserves (US$ m) | ||||||||
Reserves excl gold (end-period) | 952 | 1,154 | 1,757 | 1,892 | 1,794 | 1,756 | 2,123 | 2,094 |
Sources: Bank of Zambia, Statistics Fortnightly; IMF, International Financial Statistics; Direction of Trade Statistics; Haver Analytics. |
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Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
Exchange rate ZK:US$ (av) | ||||||||||||
2008 | 3,793 | 3,753 | 3,666 | 3,517 | 3,399 | 3,250 | 3,393 | 3,453 | 3,540 | 4,044 | 4,257 | 4,883 |
2009 | 5,017 | 5,407 | 5,585 | 5,663 | 5,186 | 5,074 | 5,134 | 4,832 | 4,655 | 4,660 | 4,657 | 4,682 |
2010 | 4,514 | 4,670 | 4,696 | 4,674 | 4,966 | 5,117 | 5,017 | 4,915 | 4,871 | 4,693 | 4,698 | 4,736 |
Deposit rate (end-period; %) | ||||||||||||
2008 | 6.3 | 6.4 | 6.6 | 6.6 | 6.6 | 6.6 | 6.6 | 6.6 | 6.6 | 6.6 | 6.6 | 6.6 |
2009 | 6.6 | 6.6 | 6.6 | 6.6 | 6.9 | 7.4 | 7.4 | 7.4 | 7.4 | 7.4 | 7.4 | 7.4 |
2010 | 7.4 | 7.4 | 7.4 | 7.4 | 7.4 | 7.4 | 7.4 | 7.4 | 7.4 | 7.4 | 7.4 | 7.4 |
Lending rate (av; %) | ||||||||||||
2008 | 18.4 | 18.3 | 18.2 | 18.2 | 18.2 | 18.5 | 18.6 | 18.6 | 19.7 | 20.6 | 20.6 | 20.9 |
2009 | 20.9 | 20.9 | 20.9 | 20.7 | 21.6 | 22.4 | 22.4 | 23.0 | 23.1 | 23.1 | 23.1 | 22.7 |
2010 | 22.7 | 22.6 | 22.6 | 21.5 | 21.3 | 21.0 | 20.6 | 20.1 | 19.8 | 19.7 | 19.6 | 19.4 |
M1 (% change, year on year) | ||||||||||||
2008 | 20.7 | 26.5 | 28.0 | 28.4 | 40.9 | 40.0 | 36.2 | 34.0 | 39.2 | 49.5 | 34.8 | 30.2 |
2009 | 25.0 | 24.2 | 18.5 | 17.3 | 5.8 | 6.1 | 7.2 | 12.7 | 7.0 | 0.5 | 7.8 | -0.4 |
2010 | 10.7 | 18.1 | 24.6 | 26.1 | 37.7 | 67.7 | 39.9 | 33.9 | 31.3 | 26.5 | 33.4 | 40.6 |
M2 (% change, year on year) | ||||||||||||
2008 | 32.7 | 33.3 | 32.7 | 30.6 | 28.0 | 27.7 | 25.1 | 22.0 | 18.7 | 38.2 | 29.6 | 23.2 |
2009 | 20.3 | 26.7 | 26.1 | 27.6 | 17.4 | 21.2 | 17.1 | 17.6 | 20.0 | 8.5 | 10.3 | 7.6 |
2010 | 7.3 | 9.0 | 11.5 | 16.2 | 23.4 | 25.6 | 28.2 | 27.6 | 32.2 | 24.0 | 29.3 | 30.6 |
Stockmarket index | ||||||||||||
2008 | 3,965 | 4,313 | 4,440 | 4,000 | 4,062 | 3,915 | 3,901 | 3,684 | 3,621 | 3,345 | 2,797 | 2,506 |
2009 | 2,420 | 2,382 | 2,183 | 2,143 | 2,498 | 2,745 | 2,834 | 2,619 | 2,807 | 2,669 | 2,658 | 2,795 |
2010 | 2,639 | 2,628 | 2,888 | 2,908 | 2,824 | 3,018 | 2,934 | 2,912 | 3,118 | 3,124 | 3303 | 3304 |
Consumer prices (av; % change, year on year) | ||||||||||||
2008 | 9.3 | 9.5 | 9.8 | 10.1 | 10.9 | 12.1 | 12.7 | 13.2 | 14.2 | 15.2 | 15.3 | 16.6 |
2009 | 16.0 | 14.0 | 13.1 | 14.3 | 14.7 | 14.4 | 14.0 | 14.3 | 13.0 | 12.3 | 11.5 | 9.9 |
2010 | 9.6 | 9.8 | 10.2 | 9.2 | 9.1 | 7.8 | 8.4 | 8.2 | 7.7 | 7.3 | 11.1 | 11.0 |
Total exports fob (US$ m) | ||||||||||||
2008 | 680.7 | 296.8 | 282.0 | 235.2 | 1036.3 | 219.6 | 455.0 | 476.4 | 380.5 | 364.4 | 154.3 | 509.4 |
2009 | 100.1 | 152.6 | 412.4 | 384.6 | 327.0 | 196.5 | 706.7 | 232.0 | 400.0 | 534.6 | 524.5 | 326.5 |
2010 | 544.9 | 312.4 | 811.0 | 660.7 | 565.6 | 474.6 | 525.7 | 592.2 | 557.5 | 593.2 | 486.1 | n/a |
Total imports cif (US$ m) | ||||||||||||
2008 | 292.9 | 335.4 | 381.2 | 450.7 | 461.8 | 446.1 | 501.3 | 615.9 | 504.8 | 413.0 | 344.1 | 349.8 |
2009 | 249.2 | 254.3 | 251.3 | 301.4 | 291.3 | 314.3 | 332.7 | 300.2 | 333.4 | 388.8 | 399.7 | 359.7 |
2010 | 419.7 | 411.7 | 409.7 | 442.1 | 437.1 | 395.8 | 436.6 | 450.2 | 460.5 | 719.0 | 436.3 | n/a |
Trade balance fob-cif (US$ m) | ||||||||||||
2008 | 387.8 | -38.7 | -99.2 | -215.5 | 574.5 | -226.6 | -46.2 | -139.5 | -124.4 | -48.6 | -189.8 | 159.6 |
2009 | -149.1 | -101.7 | 161.0 | 83.2 | 35.7 | -117.8 | 373.9 | -68.2 | 66.6 | 145.8 | 124.8 | -33.2 |
2010 | 125.2 | -99.3 | 401.3 | 218.7 | 128.5 | 78.7 | 89.1 | 142.0 | 97.0 | -125.8 | 49.8 | n/a |
Foreign-exchange reserves excl gold (US$ m) | ||||||||||||
2008 | 1,098 | 1,106 | 1,230 | 1,302 | 1,334 | 1,391 | 1,413 | 1,338 | 1,279 | 1,171 | 1,143 | 1,096 |
2009 | 1,050 | 904 | 952 | 932 | 1,118 | 1,154 | 1,182 | 1,701 | 1,757 | 1,787 | 1,852 | 1,892 |
2010 | 1,867 | 1,795 | 1,794 | 1,866 | 1,803 | 1,756 | 1,958 | 1,966 | 2,123 | 2,141 | 2,114 | 2,094 |
Sources: IMF, International Financial Statistics; Haver Analytics. |
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Please see graphic below
Please see graphic below
Please see graphic below
Land area
752,612 sq km
Population
12.94m (2009, IMF mid-year estimate)
Main towns
Population in '000, 2000 (Economist Intelligence Unit estimates based on actual data from the 1990 census and regional growth rates from the 2000 census)
Lusaka (capital): 1,432
Ndola: 536
Kabwe: 512
Kitwe: 373
Chingola: 173
Mufulira: 156
Luanshya: 152
Livingstone: 103
Climate
Tropical, cool on high plateaux
Weather in Lusaka (altitude 1,277 metres)
Hottest month, October, 18-31°C; coldest month, July, 9-23°C (average daily minimum and maximum); driest month, August, 0 mm average rainfall; wettest month, December, 231 mm average rainfall
Languages
English (official), Nyanja, Bemba, Tonga, Lozi and other local languages
Measures
Metric system
Time
2 hours ahead of GMT
Public holidays
New Year's Day (January 1st), Good Friday, Easter Monday, Labour Day (May 1st), Africa Day (May 25th), Heroes' Day (first Monday in July), Unity Day (first Tuesday in July), Independence Day (October 24th), Christmas (December 25th-26th)
Official name
Republic of Zambia
Form of state
Unitary republic
Legal system
Based on the 1996 constitution
National legislature
National Assembly; 150 members elected by universal suffrage, serving a five-year term; the president can appoint eight further members
National elections
Last presidential election on October 30th 2008, necessitated by the death of the incumbent, Levy Mwanawasa; last legislative election on September 28th 2006; next presidential and legislative elections due in mid-2011
Head of state
President, elected by universal suffrage for a term of five years; the current president will serve the remainder of Mr Mwanawasa's term
National government
The president and his appointed cabinet
Main political parties
The Movement for Multiparty Democracy (MMD) is the ruling party and holds a parliamentary majority; the largest opposition party is the Patriotic Front (PF); other parties in the National Assembly include the United Party for National Development (UPND), the Forum for Democracy and Development (FDD), the United National Independence Party (UNIP), the United Liberal Party and the National Democratic Focus
President: Rupiah Banda
Vice-president & justice minister: George Kunda
Key ministers
Agriculture & co-operatives: Estarckio Kazonga
Commerce, trade & industry: Felix Mutati
Defence: Kalombo Mwansa
Education: Dora Siliya
Energy & water development: Kenneth Konga
Environment, natural resources & tourism: Catherine Namugala
Finance & national planning: Situmbeko Musokotwane
Foreign affairs: Kabinga Pande
Gender: Sara Sayifwanda
Health: Kapembwa Simbao
Home affairs: Mukondu Lungu
Information & broadcasting: Ronnie Shikapwasha
Labour & social security: Austin Liato
Lands: Gladys Nundwe
Livestock & fisheries: Bradford Machila
Local government & housing: Brian Chituwo
Mines & minerals development: Maxwell Mwale
Parliamentary chief whip: Vernon Mwaanga
Science & technology: Peter Daka
Sport, youth & child development: Kenneth Chipungu
Transport & communications: Geoffrey Lungwangwa
Works & supply: Gabriel Namulambe
Central bank governor
Caleb Fundanga