By BUUMBA CHIMBULU
ZAMBIA’S microeconomic conditions for the second quarter of this year were the best performing in the last two years, according to ZANACO.
The financial institution has also predicted economic growth of 1.6 percent for this year.
Key drivers were booming commodity prices on the international market which helped to push mining production as well as external sector performance, says Patrick Chileshe ZANACO’s Head of Economic Research.
“I should mention that, yes off course we are not where we are supposed to be, but conditions in the second quarter of 2021 was the best in the last two years. A good example you can look at is the purchasing managers’ index which was the highest in the last two years.
“We also saw a big improvement in terms of electricity production whereby we saw ZESCO increase its production of electricity and that did help to push productivity especially in the mining sector, manufacturing and small scale artisanal,” Dr Chileshe said at the ZANACO 2021 Second Quarter Economic Review and Outlook.
On the prospects for the Zambian economy for 2021, Dr Chileshe stressed that ZANACO was expecting a positive growth of about 1.6 percent.
He indicated that other forecasts such as the International Monetary Fund (IMF), the World Bank and Bloomberg Consensus were all expecting a positive growth for Zambia.
The World Bank and Bloomberg consensus are expecting growth of about 1.8 percent and 1.7 percent, respectively, which are all largely in line with what ZANACO is predicting.
Dr Chileshe said ZANACO banked its optimism on booming commodity prices on the international market which have bene trading around US$$9,714.50 a tonne.
“Remember Zambia is a major exporter of copper and that booming commodity prices means more income for the Zambian economy and that is going to have positive effects in terms of forward and backwards linkages and that that is going to drive growth in 2021,” he stated.
He said the institution also banked its optimism on the IMF programme expected in the third or fourth quarter.
Dr Chileshe indicated that talks has so far been positive and that had given momentum to offshore investors.
“We are also expecting to see an upbeat Information and Communication Telecommunication (ICT) sector. Remember the Covid-19 has made working world to change and more organisations are setting up work from arrangements which are driving the growth for ICTs.
“Other sectors that we expect to contribute to positive growth is the growth in the agriculture sector. We also expect the good performance of the energy sector because of improved electricity to production especially from hydro sources,” he said.
Dr Chileshe however acknowledged that Zambia during the second quarter faced headwinds such as tight fiscal space and the third wave of Covid-19 which disturbed consumer spending, especially in the month of May and June.
That, he explained, badly hit the economy.
“We have seen quite a tight fiscal space in terms of Government spending especially on economic activities and that limited the demand for goods and services, resulting in dragging the pace at which the economy was recovering,” he stated.
