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
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • 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:

  • Real GDP growth in Zambia will remain subdued in 2016 at 3.4% due to a struggling copper industry and persistent power shortages. Private consumption will be restrained by higher interest rates and food costs stemming from a weak currency.

  • Fiscal consolidation efforts by the Zambian government will help to minimally narrow the budget deficit for 2016 to 7.1% of GDP. The government has also revised the mining tax regime to better accommodate the falling copper prices, although another revision leading to inconsistent policies will weigh on investor sentiment.

  • 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.

  • Dwindling copper revenues will continue to weigh on Zambia's current account deficit, while the capital and financial account will see a surplus as a result. The weak currency will challenge net export value, making imports more costly and overvaluing exports. The government and central bank will try to boost investor sentiment in order to increase FDI inflows and support the growing twin deficits.

  • The Zambian kwacha will continue its trend of depreciation in 2016 on the basis of a weak outlook for the country's copper industry. The lack of a stronger reserve arsenal means the central bank will have little in the way of ammunition to halt an expected 21.4% fall in the currency's value by year-end 2016 .

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.

Macroeconomic Forecasts (Zambia 2014-2017)
Indicator 2014 2015e 2016f 2017f
e/f=BMI estimate/forecast. Source: National Sources
Real GDP growth, % y-o-y 5.6 3.1 3.4 5.1
Nominal GDP, USDbn 25.7 16.2 13.8 14.2
Consumer price inflation, % y-o-y, eop 7.8 20.0 17.0 14.0
Exchange rate ZMW/USD, eop 6.39 11.00 14.00 15.00
Budget balance, % of GDP -6.4 -7.3 -7.1 -6.3
Current account balance, % of GDP -1.5 -5.3 -6.0 -4.9
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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