According to Markit Economics data released on February 03, revealed that Zambia’s January business pulse sagged 1.3 points to 47.7 (from 49.0 in December 2020) attributed to effects of the second COVID wave and currency depreciation. The copper producers Purchasing Managers Index (PMI) will be 23months in contraction themed by elevated manufacturing costs fueled by higher energy prices and a weak Kwacha that continues to elevated input inflation. Readings below signal contraction while those above 50 reflect expansion. With rising cases that the red metal producer has seen after the second wave hit in the last week of December 2020 into the January 2021, business disruption has continued to weigh business fabric.
Read also: ZAR ‘bulls’ and ZMW ‘bears’ to weigh Zambia’s manufacturing business pulse to year end
Zambia’s cases on February 05, totaled 60,427 a jump from December 31, 2020s 20,725 levels which is forecast to dent the business ecosystem. However the Southern African nation has not shut its borders in lockdowns to allow economic activity while adhering to health protocols. In the first COVID wave, the copper producers manufacturing pulse shriveled to 34.3 in May last year after which recovery signs were evident as PMI headlines rose to 49.3 in November capped by currency depreciation.
Into 2021, currency depreciation remains a key driver of input inflation which has resulted in upward adjustments in selling prices for commodities such as cement to mention but a few. Rand depreciation against the dollar in tandem with Kwacha weakness has continued to spiral import costs and ultimately input prices.
Read also: Input Price Inflation to weigh Zambia’s Cement Manufacturing Pulse – Lafarge
Factory activity outlook remains weak for 1H21 as the globe still grapples with epidemiological risks.
The Kwacha Arbitrageur
