The Zambian economy will bottom out in 2016 and begin a modest recovery in 2017, the World Bank (WB) indicates in its latest issue of the “Africa’s pulse” report from October 2016.
The WB projection is based on the assumption that the Zambian copper mining sector will begin to pick up gradually as improving copper prices encourage companies to raise production.
The report also notes: “Improving rainfall, as El Niño abates, will help support an increased agricultural output and hydroelectricity production.”
The WB also indicates that the 2017 positive outlook for the Zambian economy is based on the assumption of a sustained growth in China.
However, a sharper-than expected slowdown in China could weigh on demand for export commodities and undermine their prices.
Slower than expected improvements in commodity prices will affect revenue growth, which would continue to strain fiscal and current account balances, according to the WB.
This will affect Zambia due to its dependency on copper exports to China and hence vulnerability to a significant slowdown in its growth.
To avoid these risks Zambia is currently trying to diversify its economy and reduce its copper dependency.
According to a recent study, the sugar, cotton and coffee sub-sectors have the potential to diversify Zambia’s economy and contribute significantly to its growth.
During the electoral campaign earlier this year, President Lungu pledged on attracting agricultural investments to the country to decrease its dependency on mining and copper.