Africa’s second largest copper producer Zambia, recorded the steepest slide in private sector pulse as COVID risks deepen. The red metal producer headlined 37.3 in April from 44.7 in March on account of lock down effects and social distancing health protocols that have eroded aggregate demand impacting manufacturing pulse.
Read also: Dour business pulse expected this week, as COVID weighs
Zambia’s PMI has been dour for 15 months straight and was last in positive territory in February 2019 at 50.4 and has persistently remained in contraction as energy risks widen while liquidity lack and currency depreciation have been hard core themes dragging factory lower in Zambia. We forecast further contraction in the coming months as disease pandemic yet fully prices into the business ecosystem. Zambia’s bets at recovery will likely stem from the recent monetary, fiscal and regulatory interventions to re-ignite the suppressed momentum. Growth is forecast to recede 2.6% as reported by the International Monetary Fund and Word Bank at the virtual spring meetings earlier in April.
Commenting on the index Stanbic Bank Global Markets Head Victor Chileshe said, “the business environment was negatively impacted and will be further impacted in the months to come by COVID pandemic.”
Unemployment has risen to record as layoffs and business shut downs characterize the business environment.
Business pulse constriction homogeneity in peers. Zambia’s peers were all in red (>50 signaling deepening contraction) with Uganda at 21.6 (from 45.3), Ghana at 31.7 (from 41.4), Nigeria at 37.1 (from 53.8), Kenya at 34.8 (from 37.5) and South Africa at 35.1 (from 44.5) as COVID impacted these economies. Commodity dependent nations like Nigeria had a twin effects of COVID and a lower crude price affecting economic activity while Kenya and Uganda’s fresh cut flowers and tea exports respectively struggle due to restricted access to markets as flights remain cancelled.
The Kwacha Arbitrageur
