Sunday, March 3, 2024

Zambia Faced Economic Challenges in 2023, Showed Resilience in Trade Performance


In an analysis of Zambia’s trade performance in 2023, Mr. Emmanuel Muma, the Centre for Trade Policy and Development (CTPD) Researcher for Trade and Development, outlines the economic challenges faced by the nation amidst global and domestic pressures.

The global economic growth experienced a downturn in 2023, slowing to 3.0% from 3.5% in the previous year, affecting commodity markets and impacting Zambia significantly. “The copper market, which is crucial for our economy, saw a price drop to an average of US $8,589 per metric ton from US $9,084 in 2022,” Mr. Muma highlighted. This decline is particularly significant as copper constitutes over 65% of Zambia’s export earnings.

The Zambian economy itself grew at a slower pace of approximately 2.7% in 2023, down from 5.2% in 2022. The national currency, the Zambian Kwacha, depreciated by 10.9% against the US dollar. “These figures reflect the impact of various factors, including geopolitical tensions, unfavorable exchange rates, and the energy crisis, leading to subdued trade growth and consistent trade deficits,” Mr. Muma explained.

Despite these adversities, Zambia recorded a Trade Balance of about ZMK5.5 billion from January to November 2023. However, this was a sharp decline of 87.7% from the ZMK45 billion Trade Balance in the corresponding period of 2022. “The decline can be attributed to weak export volumes and the volatile nature of commodity prices, especially copper,” Mr. Muma noted.

Looking ahead, Mr. Muma maintains a cautiously pessimistic yet hopeful stance for the first quarter of 2024. Efforts are being made to enhance export earnings and address operational challenges in major mining sectors. He also pointed out the critical issue of Zambia’s dependence on copper exports. “Our narrow export structure and continuous trade deficits, particularly during the farming season, show an urgent need for enhanced manufacturing for import substitution, mainly in consumer and intermediate goods,” he stated.

To strengthen Zambia’s trade performance and economic resilience, Mr. Muma suggests several key strategies. These include diversifying export markets, particularly under initiatives like the Africa Continental Free Trade Areas (AfCFTA), encouraging import substitution by incentivizing local industries, and promoting exports and product diversification in sectors such as Information Technology, Tourism, and Financial Services.

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