Publication: Zambia Economic Brief, December 2016: Raising Revenue for Economic Recovery
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2016-12
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2016-12
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This Brief includes two sections as following: the World Bank’s assessment of recent economic developments and the outlook in the short to medium term, and its analysis of a specific development topic or theme.
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“World Bank Group. 2016. Zambia Economic Brief, December 2016: Raising Revenue for Economic Recovery. © World Bank. http://hdl.handle.net/10986/25746 License: CC BY 3.0 IGO.”
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Publication Zambia Economic Brief, December 2015(World Bank, Lusaka, 2015-12)Zambia faces its toughest economic challenges in at least a decade. The economy has come under strain in 2015 as external headwinds and domestic pressures have intensified. The main domestic risks are threefold. Firstly, that the power crisis will worsen. Secondly, a deterioration of confidence in the economy, leading to further weakening of the currency and increased levels of inflation. Lastly, a bad harvest that serves to increase food prices and reduce rural and agricultural incomes, with the greatest impact falling on the poorest households. Commodity-exporting countries’ policy makers face increasing challenges across the globe. Zambia is no exception and must grapple with multiple challenges as the economy slows down. Strengthening the fiscal position and restoring fiscal buffers are necessary to increase confidence in the economy, reduce the need for costly borrowing, and build resilience against further exogenous shocks. Economic progress since 2000, driven by mining production and services, has substantially increased the demand for electricity in Zambia. Key to note is that an increase in tariffs to cost-reflective levels is necessary but not sufficient to increase private investment in electricity generation in Zambia. The new generation capacity and emergency measures for 2016 will help in mitigating the impact of the power crisis in the coming year, but global experience shows there is no substitute for effective planning. Particular efforts are needed to improve sector planning and the procurement processes for large power projects.Publication Zambia Economic Brief, June 2016, Issue 7(World Bank, Lusaka, 2016-06-01)The external environment confronting Sub-Saharan Africa (SSA) is expected to remain difficult in the near term. Commodity prices are expected to remain low, and in 2016, growth in the region isforecast to drop to 2.5 percent from 3.0 percent in 2015 (World Bank forecast). There is considerable variation in economic performance across countries, with the slowdown concentrated among the region's largest commodity exporters. Growing economic vulnerabilities, amid weakened policy buffers, continue to pose challenges for policy makers. The balance of risks to the outlook remains tilted to the downside. The global risks include: (i) a sharper than expected slowdown in China (as the country rebalances growth toward consumption and services), (ii) a further decline in commodity prices, and (iii) tighter global financing conditions that would result in higher borrowing costs and reduced sovereign bond access for emerging and frontier countries. On the domestic front, delays in adjustment to external shocks in affected countries would create policy uncertainties that could weigh on investor sentiment and weaken the recovery.Publication Zambia Economic Brief, No. 12, July 2019(World Bank, Lusaka, 2019-07)The twelfth Zambia economic brief with a focus on how Zambia can harness its renewable resources to promote sustainable growth. This brief is part of a series of short economic updates produced twice a year by the World Bank.Publication Zambia Economic Brief, June 2015, Issue 5(World Bank, Washington, DC, 2015-06-01)After several years of strong economic performance, Zambia now confronts several important challenges that must be managed carefully to ensure sustained and inclusive growth in the future. On the one hand, the economy grew by an estimated 5.5–6.0 percent in 2014, somewhat above the average for African economies. Monthly copper production increased by an average of 8 percent during the second half of 2014, reversing the sharp slide in early 2014. Inflation fell to 7.2 percent in March and April, helped both by falling world oil prices and by the Bank of Zambia’s monetary tightening. In the first half of 2015, the authorities adjusted several key economic policies to respond to serious problems: revising rules on VAT refunds in February, announcing a new mining fiscal regime in April, and raising fuel prices in May so that the government could recover import costs. On the other hand, the kwacha has come under renewed pressure. It lost 17 percent of its value against the U.S. dollar from December 2014 through the end of March 2015. Since then it has recovered somewhat, but foreign exchange markets remain volatile. Interest rates have been rising since September 2014, due in part to increased government borrowing and in part to steps taken by the Bank of Zambia to tighten credit. Over the medium term, growth should hold steady in 2015 and then accelerate to around 6–7 percent per year in 2016–2018. Although inflation is expected to rise towards the end of 2015, it should resume falling in 2016. Low commodity prices, a more stable exchange rate, and adequate local harvests would help contain inflationary pressures and boost real disposable incomes. The resulting pick-up in private consumption, coupled with increasing copper exports, should help strengthen growth prospects.Publication Zambia Economic Brief, December 2014, Issue 4 : Financial Services - Reaching Every Zambian(Washington, DC, 2014-12)Zambia s economy is estimated to grow around 6.0 percent in 2014, slower than the 6.7 percent in the previous two years. Growth comes from a bumper maize harvest; rapid expansion in the construction industry supported in part by public investment in roads; and continued strong growth in services. Following the large fiscal deficit of 6.6 percent in 2013, the economy experienced turbulence during the first half of the year when the kwacha depreciated sharply against the U.S. dollar and other currencies, and inflation pressure increased. However, in response to policy actions, the kwacha stabilized subsequently and regained about half of the lost value, and inflation pressure also ebbed. Average inflation in 2014 is expected to be around 7.8 percent, higher than the targeted 6.5 percent and the 2013 average of 7.0 percent.
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