Zambia Country Risk Report

Published 27 May 2015 | Quarterly

  • 48 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
$1,195.00
Zambia Country Risk Report

Core Views:

  • We forecast that Zambia will record real GDP expansion of just 5.6% in 2015 as troubles in the mining sector will weigh on investment and exports growth, compounded by negative sentiment towards the country thanks to its widening fiscal and current account deficits and volatile currency.

  • The Bank of Zambia will maintain the key policy rate at 12.50% through the remainder of 2015 and the first half of 2016, when it will begin a cutting cycle. However, more profligate government spending than we currently anticipate - a salient risk with presidential elections in 2016 - would push this loosening back.

  • Zambia's external debt position, while having taken a shock in 2015, will stabilise over the next several years as the country brings in its fiscal deficit. Nevertheless, as the kwacha depreciates there is no room for further fiscal mismanagement and borrowing to cover budget deficits.

  • A relatively tight monetary policy and high reserve requirements will squeeze commercial bank profits in Zambia in 2015. That said, the country's nascent banking sector will continue to expand robustly in the years ahead as supportive base effects will lead to solid recordings in asset growth, while commercial profitability will be driven by electronic banking platforms and new products offerings.

Key Risks To Outlook:

  • The most salient risks to Zambia's economy stem from global economic developments which directly impact the price of copper, Zambia's chief export, as well as the appetite for frontier market investment. If struggles in Europe, China, and other major markets are more or less pronounced than we currently anticipate, then our forecasts would be rendered either too optimistic or too negative.

  • A meaningful shift to the left for policy could see investment flows decline, which would negatively impact growth, the currency and inflation.

  • Inclement weather could hamper agricultural production, which would send inflation higher and private consumption...

Executive Summary
5
Core Views
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Lower Mining Tax Will Fuel Public Discontent
8
Long-Term Political Outlook
9
A Question Of Policy, Not Politics
9
Chapter 2: Economic Outlook
11
SWOT Analysis
11
BMI Economic Risk Index
11
Economic Activity
12
Growth Driven By Private Consumption
12
Table : Economic Acti vit y
12
Fiscal Policy
13
Mining Tax Reversal Will Impact Capital Spending
13
Table : Fiscal Policy
13
Balance Of Payments
15
Current Account Deficit Will Widen As Copper Plummets
15
Table : Current Account
15
Regional
16
After The Commodity Boom: The New Growth Path
16
table : Structural Economic Weaknesses
18
table : 10 Outperforming Economies - Real GDP Growth , %
19
Chapter 3: 10-Year Forecast
21
The Zambian Economy To 2024
21
Mines Both A Driver Of And Risk To Growth
21
Table : Macroeconomic Indicators
21
Chapter 4: Operational Risk
25
SWOT Analysis
25
Operational Risk Index
25
Operational Risk
26
Table : Operational Risk
26
Legal Environment
27
Table : Sub -Saharan Africa - Legal Risk
28
Costs Of Labour
31
Table : Sub -Saharan Africa - Labour Cost Risk
32
Table : Regulations Governing Flexibility Of Workers
33
Chapter 5: Key Sectors
35
Power
35
Table : Total Electricity Generation Data And Forecasts
36
Table : Total Electricity Generation Data And Forecasts
37
Other Key Sectors
41
table : Pharma Sector Key Indicators
41
table : Telecoms Sector Key Indicators
41
table : Infrastructure Sector Key Indicators
41
Chapter 6: BMI Global Macro Outlook
43
Global Outlook
43
EMs Still Slowing
43
Table : Global Assumptions
43
Table : Developed States , Real GDP Growth, %
44
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
44
Table : Emerging Markets , Real GDP Growth , %
45

The Zambia Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in The Zambia and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of The Zambia's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of The Zambia's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise The Zambia's country risks against regional peers using BMI's country comparative Risk Ratings system.
  • Evaluate external threats to doing business in The Zambia, including currency volatility, the commodity price boom and protectionist policies.

The Zambia Country Risk Report by Business Monitor International (BMI) includes three major sections: Economic Outlook, Political Outlook and Business Environment.

Economic Outlook:

How will the Zambian economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for The Zambia through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Zambia Country Risk Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for The Zambia and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on The Zambia, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in The Zambia over the next 5-years?

BMI's The Zambia country Risk Ratings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Zambian Market - Political Strengths, Weaknesses, Opportunities and Threats facing The Zambia.
  • Political Stability and Risk Assessment - BMI's Risk Ratings assess explicit short- and long-term risks to political stability; latest ratings, rankings and trends for The Zambia's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark The Zambia's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Ratings with SWOT Analysis - Business environment Risk Ratings for The Zambia, benchmarked against ratings for regional neighbours.

Country Competitiveness - Competitiveness of The Zambia's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Ratings.

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