Zambia’s economy was projected to register a modest growth of 1.6 percent in 2021 and strengthen over the medium-term, the country’s central bank said on Wednesday.
This was due to the expected positive performance of the information and communication, electricity, public administration and education sectors.
“The economy is slowly beginning to recover because most of the economic fundamentals such as inflation, the exchange rate have started coming down,” Christopher Mvunga, Bank of Zambia Governor, told reporters during the release of the third Monetary Policy Committee statement.
The central bank governor said uncertainty surrounding the emergency of more contagious COVID-19 variants remains a key downside risk to the growth outlook.
Zambia recorded negative growth of three percent last year.
Mvunga said high-frequency indicators showed weaker growth in the second quarter of 2021 against a preliminary real Gross Domestic Product growth of 0.7 percent in the first quarter.
“With the exception of seasonal agricultural-related activities, the rest of the monitored indicators were below the first-quarter level,” he said.
Meanwhile, the central bank has maintained its key benchmark interest rate at 8.5 percent, the third time in a row, due to the favorable outlook for the exchange rate and improved prospects for fiscal consolidation.
The central bank chief said this was also due to the projected inflation rate which was expected to decelerate.
He said the central bank was still mindful of the subdued economic activity and existing vulnerabilities in the financial system.
According to him, the implementation of fiscal adjustment measures premised on fiscal discipline, the dismantling of domestic arrears as well as enhancement of revenue collections remains critical to restoring macroeconomic stability. Enditem
