GLOOMY PICTURE: Zambia’s economic distress to continue

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The country’s annual inflation rate increased to 15.7% in April; up from 14% in March this year, in less than a month, painting a pale picture, of Zambia’s economic prospects.

The 13 months consecutive inflation increase has since became the highest rate of inflation in nearly four years on the trot. This saw the local currency performing dismally, making it the worst-performing currency in Africa.

The Kwacha has fared badly, at 2.5% against the dollar this past month, falling by a total of 24%.

Addressing the media recently, the Statistician General for the Central Statistics Authority, Mulenga Musepa, said the increased inflation was largely due to price increases in food items.

Apparently, the Trading Economics supports this view, saying that the main upward pressure came from prices of food and non-alcoholic beverages (17 percent vs 15.2 percent in March); transport (40.1 percent vs 31 percent) and housing & utilities (17.1 percent vs 17.4 percent). On a monthly basis, consumer prices inched up 2.2 percent, after rising 1.2 percent in the previous month.

As the conditions remain unchanged, the local currency is expected to continue on this current trajectory.

Hopes are that the country gets some cash injections, foreign currency to put the economy back on the rail again. Capacity utilisation have been on a fall as well and not forgetting the effects of coronavirus.

According to some reports, the depreciation was partly driven by investor fears that Zambia will default on its debts, with Moody’s and Fitch ratings agencies both downgrading their assessments of the country in April.

Other issues include a severe drought during this year’s rainy season, which has pushed food prices higher and slashed outputs at hydropower plants.

The Bank of Zambia says inflation rates are expected to remain high for the early part of its two-year forecast period, preventing the bank from cutting interest rates which could help cushion the economy against the impact of the Covid-19 pandemic.

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One Response to GLOOMY PICTURE: Zambia’s economic distress to continue

  1. That is the trend of the whole world economies and Zambia cannot be exempt, businesses have been closed since the arrival of corona virus Zambia is one of the global village.
    In the USA 30,000,000 people have lost jobs and are now on handouts just imagine how devastating this virus can be.
    Big economies are shrinking by 15percent how can little Zambia with small economy be exempt.

    nshilimubemba
    May 4, 2020 at 7:46 pm
    Reply

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Start: 2019-07-01 End: 2019-07-31