Zambia Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

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  • Understand and measure the political, business environment and operational risks to your company
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  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Zambia Country Risk Report
Product Price
$1,195.00

Core Views:

  • Zambia's economic growth will remain subdued over 2016 owing to pressure on net exports from still low copper revenues, a regional drought as well as a substantial power shortage. Real GDP growth of 3.4% this year will be underpinned by a modest increase in private consumption and fixed capital formation. In the medium term, Glencore's announcement to invest USD1.1bn into Zambia's mining sector will bode well for overall investment into the country.

  • The Zambian government will continue to boost social expenditure as President Lungu attempts to gain public favour in light of the August general elections. Fiscal revenues will increase gradually over the coming years, in line with the copper sector's slow recovery. Elevated public debt levels will keep investors cautious as concern over debt-servicing costs rise.

  • Various macroeconomic and domestic challenges will make it easier for opposition leader, Hakainde Hichilema to secure a win in the next presidential elections, taking place in August 2016. Incumbent President Edgar Lungu continues to focus on social spending in light of the upcoming elections, although we believe it will not be enough to secure public favour.

  • Zambia's current account will remain under pressure over 2016 as stunted copper revenue growth weighs on exports, while strong import growth will stem from the effects of the regional drought.

  • The Bank of Zambia will continue its hawkish monetary policy approach over the remainder of 2016 owing to persistently high inflation levels. As a result, credit growth will remain subdued as consumers opt to save, negatively impacting private consumption levels.

  • The Zambian kwacha will depreciate in the coming months, as investor sentiment deteriorates and real interest rates dip into negative territory. In 2017 though, the unit will resume an appreciatory trajectory as stronger copper prices and production boost trade dynamics while investor-friendly policies toward the mining sector bolster foreign investment.

Key Risks:

  • A sharper than expected Chinese slowdown keeps the copper price in decline, leading to further currency weakness and job losses as more mining companies close operations in the challenging operating environment.

  • Government expenditure maintains a focus on unproductive areas of the economy, such as public sector wages, while capital spending remains well below the amount necessary to improve the country's underdeveloped energy and infrastructure sectors.

Zambia Macroeconomic Forecasts
Indicator 2014 2015e 2016f 2017f
e/f=BMI estimate/forecast. Source: National Sources
Nominal GDP, USDbn 25.8 16.2 16.8 19.6
Real GDP growth, % y-o-y 5.6 3.1 3.4 5.1
Consumer price inflation, % y-o-y, eop 7.9 21.1 17.0 11.0
Exchange rate ZMW/USD, eop 6.39 11.00 11.50 10.90
Budget balance, % of GDP -6.4 -8.1 -7.8 -6.7
Current account balance, % of GDP -1.5 -5.6 -8.3 -6.6
Executive Summary
5
Core Views
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Net Exports To Dampen Economic Growth
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
9
TABLE: PRIVATE CONSUMPTION FORECASTS
9
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Fiscal Policy And Public Debt Outlook
11
Current Expenditure Focus Will Widen Fiscal Deficit
11
Structural Fiscal Position
12
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
12
External Trade And Investment Outlook
14
Weak Trade Dynamics Will Widen Current Account Deficit
14
Outlook On External Position
15
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
15
TABLE: TOP 5 GOODS IMPORTS IN 2015
16
TABLE: TOP 5 GOODS EXPORTS IN 2015
16
Monetary Policy
17
High Inflation Levels Will Keep Interest Rates Elevated
17
Monetary Policy Framework
18
Currency Forecast
19
ZMW: Rally To Be Reversed By Weak Fundamentals
19
TABLE: BMI CURRENCY FORECAST
19
Chapter 2: 10-Year Forecast
21
The Zambian Economy To 2025
21
Mines A Driver Of And Risk To Growth
21
TABLE: LONG-TERM MACROECONOMIC FORECASTS
21
Chapter 3: Political Outlook
23
SWOT Analysis
23
BMI Political Risk Index
23
Domestic Politics
24
Hichilema Victory Will Bolster Business Environment
24
TABLE: POLITICAL OVERVIEW
24
Long-Term Political Outlook
26
A Question Of Policy, Not Politics
26
Chapter 4: Operational Risk
29
SWOT Analysis
29
Operational Risk Index
29
Operational Risk
30
TABLE: OPERATIONAL RISK
30
Economic Openness
31
TABLE: TOP 5 IMPORT PARTNERS & PRODUCT IMPORTS, 2010-2014, USDMN
31
TABLE: FREE TRADE AGREEMENTS
32
TABLE: FREE TRADE ZONES AND INVESTMENT INCENTIVES
33
Availability of Labour
35
TABLE: SUB-SAHARAN AFRICA - AVAILABILITY OF LABOUR RISK
36
Chapter 5: BMI Global Macro Outlook
41
Global Macro Outlook
41
Tentative Stability, But New Risks Emerging
41
TABLE: GLOBAL ASSUMPTIONS
41
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
42
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
43
TABLE: MACROECONOMIC DATA & FORECASTS
45

Assess your risk exposure in Zambia with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Zambia with confidence.

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