By BUUMBA CHIMBULU
ZAMBIA’S annual Gross Domestic Product (GDP) growth accelerated to 8.1 percent in the second quarter of this year, the highest in more than a decade and a clear signal that Covid-19 induced economic pains are almost over.
This comes after Zambia recorded a 0.5 percent growth in the first quarter of 2021.
With an exception of the mining sector whose production shrunk 7.9 percent, all economic sectors registered positive growth for the first time since the first quarter of 2021.
This is contained in a paper called “Zambia in Record GDP Growth in Q2 2021: Is This a Sign That Pandemic Woes Are Over?” done by Gerald Soko and Dr Patrick Chileshe of Zanaco bank.
The paper attributed growth to the strong external sector performance was as a key driver of economic growth in the second quarter of 2021 despite copper production and volume of exports declining.
“With prices of copper soaring on the international market, Zambia’s exports increased to K61.6 billion from K53.2 billion in the first quarter of 2021 whereas imports declined to K23 billion from K25.2 billion over the same time.
“It is our view that even though copper production declined, the strong performance of the external continued to provide backward and forward linkages to Zambia’s manufacturing, retail as well as services sectors through increased demand,” the paper stated.
The paper also indicated that other factors included the significant build-up in liquidity among the citizenry as the country approached the August 12, 2021 general elections also helped to push the demand for goods and services.
It stated that data suggest that between June 2020 and June 2021, currency in circulation and money market liquidity soared 52.1 percent and 55.4 percent, respectively.
“Easing credit conditions saw the private sector borrow more from Zambia’s financial services industry to help meet the growing needs of their customers. First half of2021 saw private sector credit expand 11.8 percent for the first time since the outbreak of the Covid-19 pandemic in late 2019,” it stated.