Zambia’s private sector pulse rallied to a 2-year high after headlining 49.7 in March, 2.6 points higher than February’s 47.1 but was 0.3 points shy of the 50 mark. According to Markit Economics, Zambia’s private sector neared stabilization on the back of improved demand, new orders and employment stability. This will be the softest deterioration in 2-years as the copper producer remains in contraction for 25-months straight. Fifty (50) is the benchmark for contraction for expansion (>50) and contraction (<50).
The Southern African nation continues to be weighed by cost push input inflation which is at a 4-month high as currency weakness pressures persist. The copper producer has grappled with a weakening currency on mismatches in supply – demand fundamentals as it remains in the labyrinth of rising external debt at a time when the COVID pandemic has amplified fiscal fragilities. Zambia has successfully dealt with a second pandemic wave that almost paralyzed the first quarter economic activity in a steep surge in infection cases leading to business disruption.
Recently the red metal producer, approved a vaccine rollout that will see 20% of its eligible 17.4million population be vaccinated as part of the COVAX facility under the auspices of the UNICEF and WHO. Zambia’s positivity rates have eased to a current at 2.9% a good indicator of pandemic induced economic recovery as businesses seek to claw back lost growth.
Other risks to private sector growth include dollar scarcity waning foreign currency liquidity that continues to spiral inout inflation and disrupt fuel supply chains affecting manufacturing. Rising international crude prices have remained an upside risk to fuel prices as the energy regulator reviews prices.
The Kwacha Arbitrageur
