Zambia flag Zambia: Economic and Political Overview

The economic context of Zambia

Economic Indicators

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The economy of Zambia, the second-largest copper producer in Africa after the Democratic Republic of the Congo, is highly dependent on copper prices, which generate three-quarters of export earnings. The country's growth has slowed in recent years, due to the fall in the price of copper, but also to the consequences of the drought on agricultural and hydroelectric production, as well as the pandemic - which brought on the first recession recorded in the country since 1989. However, the economy resumed growing in 2021 and growth continued in 2022, when the country recorded a GDP growth of 2.9%, underpinned by recovery in the mining, tourism, and manufacturing sectors. In 2023 and 2024, growth is expected to pick up to 4% and 4.2%, respectively, with private consumption being its main driver.

In 2022, general government balance closed at -1.8% of GDP in 2022, a rate which is expected to widen to -3.7% in 2023, before reaching -0.7% in 2024. That same year, the country recorded an inflation rate of 12.5%, a rate which should decrease to 9.6% in 2023 and 7.7% in 2024, on a continued downward trend toward the 6%-8% target range established by the central bank. With the easing of inflationary pressures, household incomes should benefit, boosting consumption. Underlying this projection is the positive impact of higher copper prices mainly through the exchange rate. According to the last available data, in 2021, government deficit decreased thanks to higher mining revenues and a record dividend payment from the central bank, which put general government at the rate of 101%. Still, debt remained substantial, mainly due to increased government spending - including on fuel, agricultural input subsidies, and election-related spending. Although the pandemic has significantly impacted the Zambian economy, the country has been recovering, with the government implementing measures to counteract the economic crisis resulting from it. Despite the efforts to contain the economic impact of the pandemic and ensure a quick recovery, the country's economic rebound has been slow but steady.

While Zambia achieved lower middle-income status in 2011, after a decade of strong growth, widespread and extreme rural poverty (half of Zambians still live in poverty) remains a significant problem and is compounded by a rate high birth rate and a relatively high burden of HIV/AIDS (one in eight Zambians has the virus). In 2022, the unemployment rate in the country was at 13.2% (ILO Estimate), with youth unemployment being particularly high, leading more young people in Zambia venture in businesses to counter unemployment.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 29.7429.5431.0433.5036.23
GDP (Constant Prices, Annual % Change) 4.73.64.34.54.7
GDP per Capita (USD) 1,4861,4361,4691,5431,626
General Government Gross Debt (in % of GDP) 98.50.00.00.00.0
Inflation Rate (%) n/a10.69.67.57.0
Current Account (billions USD) 1.071.112.192.823.06
Current Account (in % of GDP) 3.63.87.18.48.4

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

The agricultural sector is the backbone of the Zambian economy: although the sector represents only 3.4% of the country's GDP, it employs 49.6% of the workforce (World Bank). Zambia spans 75 million hectares, of which 58% is classified as medium to high potential for agriculture production; however, agriculture in Zambia remains largely underexploited, with only 15% of its potential arable land under cultivation. The sector's low contribution to GDP is attributable to poor rural infrastructure and an extreme vulnerability to drought. Zambia's agricultural sector focuses mainly on crop-farming (maize, cotton, soybeans, tobacco, groundnuts, paprika, sorghum, wheat, rice, sunflower seeds) and livestock production. The country is also one of the biggest seed exporters in Africa. In 2022, experienced significant droughts, which significantly impacted the country's crops.

The industrial sector is estimated to account for 42.5% of GDP and 10.5% of employment, mostly thanks to the mining, construction and manufacturing sub-sectors. Major industries of Zambia include copper mining and processing, construction, emerald mining, beverages, food, textiles, chemicals, fertiliser and horticulture. Growth in the manufacturing industry is largely driven by the agro-processing of food and beverages as well as the textiles and leather sub-sectors. However, dependency on copper which is the country’s main export makes Zambia vulnerable to fluctuations in the world commodities prices. While the country's industry sector, especially mining, was negatively impacted during the early stages of the pandemic, high copper prices and the reintroduction of measures allowing mining royalties to be deducted from corporate income tax have supported investment in the mining sector, which showed a significant recovery in 2022. Moreover, the development of the manufacturing sector also benefited from further tax breaks for export-oriented investments, as well as the reduction of the corporate tax rate from 35% to 30%.

Services play a major role in the Zambian economy. They represent 49.9% of GDP, and employ 39.8% of the total workforce. The tertiary sector includes a large wholesale and retail industry. Tourism is also growing and has a positive ripple effect on the transport and hotel sectors. Even though COVID-19 dampened the growth of tourism the country was experiencing, 2022 saw a slight recovery in the sector, a trend which is expected to continue in the coming years.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 58.7 8.8 32.5
Value Added (in % of GDP) 3.4 33.8 58.0
Value Added (Annual % Change) -2.4 -2.1 9.9

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
50,4/100
World Rank:
159
Regional Rank:
39

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

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Latest Update: November 2023

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