Zambia's Economy Plays a Bittersweet Melody of 2.5% Q3 Growth Amid Inflation Disruptions

Zambia's economy has recorded a bittersweet 2.5% growth in the third quarter of 2024. Amidst this growth, inflation has soared to 16.7%, casting a dark shadow over the nation's the festive season .

Gross Domestic Product (GDP), a measure of all final goods and services produced in an economy over a specific period, expanded by 2.5% in Zambia's third quarter of 2024. This growth rate is down 3.2% from the 5.7% recorded in 2023. The information and technology, and construction sectors drove this growth, contributing 1.3% and 1.2% respectively. Conversely, the electricity supply and finance industries contracted GDP by 0.8% and 0.3% respectively.

Despite their marginal contribution to GDP, the arts, entertainment, and recreation industry grew by 24.3%, while the energy supply sector shrunk by nearly half (-44.3%) in Q3.

Inflation Update

The annual inflation rate from December 2023 to December 2024 averaged 16.7%, indicating a rise in market prices. To maintain the same standard of living as in December 2023, earnings should increase by at least 16.7%. If disposable income remains constant, the lifestyle would worsen by approximately 14.3%. Inflation can be likened to a mouse in one's piggy bank, slowly eroding savings.

Food inflation for the same period stood at 18.6%, up from 18.2% in November 2024. This surge in food prices primarily affected essential commodities such as bread, cereals, meat, cooking oil, eggs, and beans. Non-food inflation came in at 14.2%, compared to 14.1% in November 2024, mainly driven by price movements in motor vehicles, air and road transport. Soaring food inflation disproportionately affects the poor, who spend a significant portion of their disposable income on food.

International Trade

Zambia's international trade, comprising imports and exports, totalled K530.3 billion from January to November 2024, up from K374.8 billion during the same period in 2023. The country's exports (K266.9 billion) exceeded imports (K263.4 billion), resulting in a year-to-date trade surplus of K3.5 billion. November recorded a trade surplus of K1.1 billion, reversing the K3.1 billion deficit in October 2024.

Copper Trading

Refined copper earnings surged 18.7% from K17.2 billion in October 2024 to K20.4 billion in November 2024. Copper export volumes also increased by 17.0% from 68.0 thousand MT in October 2024 to 79.5 thousand MT in November 2024. However, copper prices on the London Metal Exchange market slowed by 4.9% from US$9,539.2 per MT in October 2024 to US$9,074.8 per MT in November 2024.