Tag Archives: Zambia Economy

Business, Malawi, Opinion, Regional

Taking a closer look at Malawi, Zambia’s economies amid global recession

Burnett Munthali

LILONGWE-(MaraviPost)-It is important to understand the economy of Malawi and other neighbouring countries that share borders so that we appreciate the strides we are making as a nation.

Someone’s at will compare Malawi with itself as well to check the economic growth.

Today, this article takes you through the economy of Malawi and Zambia.

The two economies of Malawi and Zambia

Comparison In 2021, Malawi ranked 163 in total exports ($947M), and does not have data regarding Economic Complexity Index. That same year, Zambia ranked 96 in the Economic Complexity Index (ECI -0.74), and 86 in total exports ($13.4B).

The population of Zambia was 19,077,816 (July 2021 est.) The population of Malawi was 20,308,502 (July 2021 est.) 65 years and over: 2.27% (male 173,582/female 221,316) (2020 est.)

Malawi remains one of the poorest countries in the world despite making significant economic and structural reforms to sustain economic growth.

The economy is heavily dependent on agriculture, which employs over 80% of the population, and it is vulnerable to external shocks, particularly climatic shocks.

Zambia’s economy is highly dependent on mining and agriculture, but despite its abundant resources, growth has been insufficient to lift its young and growing population from poverty.

In the decade ending in 2021, growth averaged 3.7 percent, with high volatility in mining and the weather-dependent agricultural sector.

Malawi’s economy continues to be significantly weakened by frequent exogenous shocks coupled with macro-fiscal imbalances.

Growth was projected to increase in 2023 to 1.6% as electricity supply improved, compared to 0.9% in 2022.

However, severe, and persistent shortages of foreign exchange continued to subdue growth.

The country secured a staff-level agreement with the IMF and return to an Extended Credit Facility by the end of 2023.

The economy is expected to grow at 2.8% in 2024, supported by further anticipated macroeconomic reforms.

However, such growth remains insufficient to substantially mitigate the prevailing high levels of poverty.

Zambia is classified as a developing country in a recent report.

Zambia is classified as a lower-middle-income country by the World Bank in a recent report.

When a country is classified as a developing country, it means it has a less developed industrial base and a low Human Development Index when compared to other countries.

In a recent statement, the Policy Monitoring and Research Centre (PMRC) has forecasted a robust economic growth for Zambia, projecting a growth rate exceeding 4 percent in 2024.

The positive outlook is attributed to continued policy reforms, higher global copper prices, and increased market confidence resulting from ongoing fiscal consolidation measures.

Malawi GDP growth is projected to rebound to 2.0% in 2023 and 3.5% in 2024, driven by a recovery in agriculture, tourism and exports, and foreign direct investment.

Headwinds include weather-related shocks and the prolongment of Russia’s invasion of Ukraine.

Despite tight monetary policy, inflation is expected to rise to 22.8% in 2023 before falling to 15.4% in 2024.

The current account deficit is projected to narrow to 11.7% of GDP in 2023 and 12.3% in 2024 due to weak growth and domestic demand.

Fiscal consolidation to achieve medium-term debt sustainability was expected to narrow the fiscal deficit, but a mixed picture is emerging.

In 2023, the fiscal deficit is projected to rise to 7.8% of GDP due to the impact of Cyclone Freddy before falling to 7.7% in 2024.

Using the baseline assumptions, the debt-to-GDP ratio is likely to fall to 72.6% by 2026 from 76.6% in 2022.

GDP per Capita in Zambia is expected to reach 1371.00 USD by the end of 2024, according to Trading Economics global macro models and analysts expectations.

In the long-term, the Zambia GDP per capita is projected to trend around 1430.00 USD in 2025 and 1491.00 USD in 2026, according to our econometric models.

In the latest reports, Zambia Foreign Exchange Reserves equaled 3.7 Months of Import in Oct 2023. Its Money Supply M2 increased 6.3 USD bn YoY in Oct 2023.

Zambia Domestic Credit reached 5.8 USD bn in Oct 2023, representing an increased of 35.1 % YoY.

The country’s Non Performing Loans Ratio stood at 4.4 % in Sep 2023, compared with the ratio of 4.4 % in the previous month.

Foreign Exchange Reserves in Malawi increased to 1414.60 MWK Billion in December from 990.20 MWK Billion in November of 2023.

Foreign Exchange Reserves in Malawi averaged 430.65 MWK Billion from 2008 until 2023, reaching an all time high of 1414.60 MWK Billion in December of 2023 and a record low of 19.30 MWK Billion in March of 2009. source: Reserve Bank of Malawi

The Malawi Kwacha is trading at 1677.92 against 1US$ while Zambian Kwacha is at 23.50 against 1US$.

Development, Malawi

Zambia Kwacha, Hakainde Hichilema Soars

Maravi Post Reporter 1 Comment
President Hakainde

By Faustine Ngila

When he first came into office, almost a year ago, Zambia’s new president was ridiculed by skeptics who called him, “the calculator boy,” for his strong focus on the economy and his background as an accountant.

Looking back now, it’s evident that these were the exact skills that Zambia needed to pull itself back from the economic mess it was in at the time, having become the first African country to default on repayments during the pandemic. Since he became president in August last year, Hakainde Hichilema has steered the economy towards stability.

The Zambian kwacha is the best performing currency in the world against the US dollar, rallying over 18.5% from Jan. 22 to Sept. 1.

While continental peers South Africa, Zimbabwe, Nigeria, Ghana, and Kenya have been unable to control rising inflation and plunging currencies, Hichilema’s government has managed to reduce the inflation rate from 24.4% in August 2021 to 9.7% in June this year.

Zambia’s economy


What could be Zambia’s secret in shining in economic areas where almost all countries in the world are struggling? A raft of both monetary and fiscal measures, according to the Policy Monitoring and Research Centre in Lusaka, the capital.

Kwacha has been rallying against the US dollar

When the government’s monetary policy committee met last November, it decided to “raise the monetary policy rate by 50 basis points to 9%.” The rate remains unchanged till now. The ultimate goal is to reduce inflation to between 6% and 8% by mid 2023 and a decline in inflation had been achieved when it met again in May 2022.

To support agriculture and livestock, the government also removed 5% customs duty on the importation of cattle and chicken breeding. The rate of rise of food prices fell from 12% in July to 11.3% in August.

Challenges still prevail though in the mining sector, which contributes 10% to the country’s GDP.

Restructuring Zambia’s debt

An agreement with the International Monetary Fund (IMF) to restructure Zambia’s debt, a $1.4 billion bailout package has seen the Kwacha strengthen against the US dollar and helped contain the rate at which prices were rising due to supply-chain disruptions emanating from the war in Ukraine and ravages caused by the covid-19 pandemic. The IMF board approved a $1.3 billion 38-month loan to Zambia on Aug. 31 in addition to another $1.3 billion special drawing rights allocation from the fund it received in August 2021.

Economist Patrick Chileshe says the other reason why the Kwacha has been gaining against the US dollar is increased forex supply. To guard against the volatility in the exchange rate, the central bank was offloading an average of $13 million per day in June.

“We have seen the Kwacha gain strength, and that was driven by increased foreign exchange supply to the market by the Bank of Zambia which was consistent in the market, whereas the demand for US dollars has been low and that led to the appreciation of the Zambian Kwacha,” Chileshe explains.