RECESSION: Zambia economic woes mount

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The Bank of Zambia has disclosed that the coronavirus pandemic has pushed the country’s economy into a recession, amid deterioration of key economic activities.

BoZ Governor, Dr. Denny Kalyalya has disclosed that inflationary pressures have persisted with overnight interbank rates surging up amid a tight liquidity crunch.

In his presentation this afternoon, Kalyalya said the decision on the Policy Rate will continue to be guided by inflation forecast, outcomes, identified risks, including those associated with the COVID-19 pandemic.

The Central Bank Governor said demand for government securities has remained weak; while interest rates increased.

This signals an unhealthy economy, compounded by credit and money supply growth edges up; Fiscal pressures heighten; Current account surplus increases; Kwacha depreciated sharply.

Although projected path for inflation is higher than the February 2020 MPC forecast, Kalyalya said it will trend towards the upper bound of the 6-8 % medium-term target range at the end of the forecast horizon.

Policy Rate has been lowered by 225 basis points to 9.25%. The decision was arrived at by the Monetary Policy Committee at its quarterly meeting held on May 18 – 19, 2020.

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