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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  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
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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
Copper Sector Reduces Shiny Prospects Of Growth
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
9
TABLE: PRIVATE CONSUMPTION FORECASTS
9
TABLE: GOVERNMENT CONSUMPTION FORECASTS
9
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Fiscal Policy And Public Debt Outlook
11
Fiscal Deficit Will Remain Under Strain
11
Structural Fiscal Position
12
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
12
External Trade And Investment Outlook
13
Copper Slump Shakes Current Account Deficit
13
Outlook On External Position
14
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
15
TABLE: TOP 5 GOODS IMPORTS IN 2014
15
Monetary Policy
16
Weak Kwacha Weighs Down Monetary Policy
16
TABLE: TOP 5 GOODS EXPORTS IN 2014
16
Monetary Policy Framework
17
Currency Forecast
18
ZMW: Fiscal Consolidation Improves Investor Confidence
18
TABLE: BMI CURRENCY FORECAST
18
Chapter 2: 10-Year Forecast
21
The Zambian Economy To 2025
21
TABLE: LONG-TERM MACROECONOMIC FORECASTS
21
Chapter 3: Political Outlook
23
SWOT Analysis
23
BMI Political Risk Index
23
Domestic Politics
24
Challenges Pave Way For Hichilema's Win
24
TABLE: POLITICAL OVERVIEW
24
Long-Term Political Outlook
25
A Question Of Policy, Not Politics
25
Chapter 4: Operational Risk
29
SWOT Analysis
29
Operational Risk Index
29
Operational Risk
30
TABLE: OPERATIONAL RISK
30
Trade Procedures And Governance
31
TABLE: TRADE DOCUMENTATION BREAKDOWN
31
TABLE: TRADE PROCEDURES BREAKDOWN
31
TABLE: SUB-SAHARAN AFRICA-TRADE PROCEDURES AND GOVERNANCE RISK
32
Vulnerability To Crime
34
Chapter 5: BMI Global Macro Outlook
39
Global Macro Outlook
39
Downside Risks Gather Momentum
39
TABLE: GLOBAL ASSUMPTIONS
39
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
40
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
40
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
41
TABLE: MACROECONOMIC DATA & FORECASTS
43

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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