Zambia’s real GDP growth was initially estimated at 5.2% in 2025 but was revised down to 3.8% in March 2026, matching the 2024 level, according to the African Economic Outlook 2026 released by the African Development Bank (AfDB) in May 2026.
The African Economic Outlook is the AfDB’s flagship annual publication, providing macroeconomic analysis and projections for all 54 African countries.
The downward revision reflects underperformance in information and communications technology, wholesale and retail trade, and finance and insurance.
Growth in 2025 was driven by strong performance in mining and agriculture on the supply side, with net exports and foreign direct investment supporting demand.
The AfDB projects growth to recover to 5.0% in 2026 and 6.3% in 2027, driven by mining, agriculture, and energy recovery.
Inflation declined to 14.0% in 2025 from 14.8% in 2024, reflecting tighter monetary policy and improved agricultural output, and is projected to ease further to 9.3% in 2026 and 7.2% in 2027 as food supply improves. The central bank’s target range is 6.0–8.0%.
The fiscal deficit widened to 4.6% of GDP in 2025 from 3.5% in 2024, driven by debt service costs and fuel arrears clearance, financed through domestic and external borrowing.
The fiscal deficit is projected to improve significantly to 2.7% of GDP in 2026 and 1.9% in 2027, supported by stronger revenue mobilization and fiscal consolidation.
Public debt dropped sharply to 87.6% of GDP in 2025 from 101% in 2024, reflecting reductions in both domestic and external debt following Zambia’s debt restructuring. The AfDB notes that debt distress risk remains high.
The current account deficit narrowed markedly to 1.0% of GDP in 2025 from 4.4% in 2024, supported by higher copper export receipts, and is projected to swing to a surplus of 0.8% of GDP in 2026 and 3.1% in 2027, driven by higher copper export earnings and favorable global prices.
International reserves improved to 4.8 months of imports in 2025, up from 4.4 months in 2024.
The financial sector remains stable, with non-performing loans falling to 3.8% and the capital adequacy ratio rising to 25%.
Downside risks cited by the AfDB include drought, reduced aid flows, the Middle East conflict, and commodity price volatility.
Development Finance and Revenue Mobilization
Domestic revenue financed 81% of the 2025 budget, up from 74% in 2024, and is projected to rise further to 82% in 2026 and 85% in 2027.
Constraints to mobilizing development finance include a high debt stock, declining official development assistance, tax evasion, a large informal sector, and low uptake of smart invoicing systems.
Zambia is diversifying financing sources through increased use of public-private partnerships in infrastructure and service delivery, supported by an improving business environment.
Key institutional reforms underway include the rollout of the Integrated Financial Management Information System, the Bank of Zambia Act (2022) strengthening banking supervision, and the Banking and Financial Services (Green Loans) Guidelines (2023) to support sustainable finance.
Priority actions for scaling development finance include strengthening debt management, expanding data-driven tax administration to reduce leakages, and implementing foreign exchange market guidelines to improve transparency and stability.
Social Context
Extreme poverty stood at 48% in 2025, down from 49% in 2024.
Unemployment declined to 10.3% in 2025.
Zambia’s 2025 Human Development Index value stood at 0.595.
The government is investing in education, health, agriculture, and cash transfers to reduce inequality.
Regional Perspective
Zambia’s revised 3.8% growth in 2025 sits below the African continental average of 4.4%, underscoring the drag from the GDP downward revision and the country’s ongoing structural challenges.
Within Southern Africa, Zambia outperforms the region’s largest economy: South Africa grew at just 1.2% in 2025, making Zambia a stronger performer by that measure.
However, Zambia’s inflation at 14.0% is significantly higher than most regional peers, limiting real purchasing power and investor confidence.
Zimbabwe posted the strongest growth in the region at 7.6% in 2025, driven by a 24% expansion in agriculture and continued lithium and gold mining investment, though it carries far greater macroeconomic instability with inflation still at 89% in 2025.
Zambia’s copper sector remains its primary growth driver and its key investor proposition. The AfDB’s projection of a current account surplus from 2026 onward, driven by copper export earnings, signals improving external fundamentals provided global commodity prices hold.
Public debt at 87.6% of GDP, despite dropping sharply from 101% in 2024, remains the single largest risk factor distinguishing Zambia from better-rated regional peers and continues to constrain access to affordable external financing.
The projected recovery to 6.3% growth in 2027 would place Zambia among Southern Africa’s fastest-growing economies, if mining, agriculture, and energy reforms deliver as expected.
