2013-10-17 17:03:39 - Fast Market Research recommends "Zambia Business Forecast Report Q4 2013" from Business Monitor International, now available
Sluggishness in global metals markets has continued to weigh on Zambia's economy, although we still foresee real GDP expansion of above 6.0% in both 2013 and 2014.
Although still a bastion of stability by regional standards, political risk continues to rise, as President Michael Sata and his Patriotic Front come under criticism for disrespecting the rights of free assembly, the press, and rule of law.
Major Forecast Changes
Due to ongoing headwinds in the global economy that have hampered economic activity in the crucial mining sector, along with the expected impacts of new government policies, we have downgraded our growth estimate for 2013, from 7.3% to 6.3%.
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Key Risk 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.
We again stress that we believe that President Michael Sata understands the importance of maintaining good relationships with foreign businesses and other private sector stakeholders. However, recent actions threaten Zambia's reputation for democratic stability, and if the situation worsens, businesses may become more wary.
Partial Table of Contents:
Major Forecast Changes
Key Risk To Outlook
Chapter 1: Political Outlook
BMI Political Risk Ratings
Anger Over PF Overreach To Spur Change?
- The heavy-handed actions of the administration of President Michael Sata continue to generate controversy in Zambia, as the ruling party has demonstrated a low tolerance for criticism. The Public Order Act in particular is under increased scrutiny by opposition parties and civil society groups, and could see the law modified or even repealed over the medium term.
Long-Term Political Outlook
Long-Term Political Outlook - A Question Of Policy, Not Politics
- Zambia boasts a competitive political environment that has been characterised by closely contested and increasingly freer and fairer elections (according to observers). However, issues such as corruption and income inequality will require redress over the coming decade, in order to keep Zambia on a progressive political and economic growth trajectory.
TABLE: POLITICAL OVERVIEW
Chapter 2:Economic Outlook
BMI Economic Risk Ratings
Downgrade Amid Headwinds, But Stronger Growth Ahead
- Due to sluggishness in the global economy, and the expected impact of various recently-enacted policy reforms, we have downgraded Zambia's real GDP growth forecast. We now believe that the economy will expand by a still-respectable 6.3%, compared to our earlier forecast of 7.3%, and this rate will likely accelerate in the coming years.
TABLE: ECONOMIC ACTIVITY
Hiking Cycle To Slow, But Not Stop
- Given the adverse pressures on the horizon for both growth and inflation, the Bank of Zambia has elected to maintain its benchmark policy interest rate at 9.75%. The kwacha has begun to stabilise, and inflation ticked slightly lower in August, but overall we believe that risks to the policy rate remain weighted to the upside; our year-end target stands at 10.0 0%.
TABLE: MONETARY POLICY
Despite Spending Reforms, Deficit To Persist
- Despite recent reforms which have helped to put Zambia on a more sustainable fiscal path, spending increases on public sector salaries and other areas will keep the country's budget under pressure. Meanwhile, the sluggish global economy will continue to put downward pressure on revenues. 15
TABLE: FISCAL POLICY
Balance Of Payments
A Slight Downgrade, But Current Account To Improve
- Based on production levels in Zambia's mining sector which have come in slightly lower than we anticipated, we have altered our current account forecast, and are now expecting a shortfall of 2.2% of GDP in 2013. Nevertheless, as major projects come online we expect that a mining-led improvement will commence, bringing the account back into surplus next year. 16
TABLE: CURRENT ACCOUNT
Chapter 3:10-Year Forecast
The Zambian Economy To 2022
Mines Both A Driver Of And Risk To Growth
- On the back of an improving regional outlook and good prospects for the mining sector, we are projecting average annual growth of 6.8% over our forecast period to 2022. Buoying this strong performance will be a strengthening private sector, as well as ongoing investment in mining, agriculture and infrastructure, aided by a favourable business environment.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 4: Business Environment
BMI Business Environment Risk Ratings
Business Environment Outlook
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
TABLE: BMI LEGAL FRAMEWORK RATING
TABLE: LABOUR FORCE QUALITY
TABLE: ANNUAL FDI INFLOWS
TABLE: TRADE AND INVESTMENT RATINGS
TABLE: TOP EXPORT DESTINATIONS (US$MN)
Chapter 5: Key Sectors
TABLE: GOVERNMENT HEALTHCARE EXPENDITURE TRENDS, HISTORICAL DATA AND FORECASTS, 2009-2017
TABLE: PHARMACEUTICAL SALES, HISTORICAL DATA AND FORECASTS, 2009-2017
TABLE: PRIVATE HEALTHCARE EXPENDITURE TRENDS, HISTORICAL DATA AND FORECASTS, 2009-2017
Full Table of Contents is available at:
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