Zambia finished 2021 with an inflation rate of 16.4 percent, the lowest since October 2020.
Consumer prices grew 16.4% from a year ago, according to Musepa Mulenga, interim statistician-general of the Zambia Statistics Agency, compared to 19.3% in November.
“Food price growth slowed to a 13-month low of 19.9% in December, compared to 25.4 percent the previous month, and non-food inflation decelerated to 12.1 percent from 12.2 percent in November,” Mulenga told reporters in the capital Lusaka on Thursday, adding that “costs rose 0.6 percent in the month.”
For Africa’s second-largest copper producer, a persistent fall in inflation is critical, as the country’s economy has deteriorated due to a $16 billion external debt and the detrimental impacts of the COVID-19 pandemic.
In August, President Hakainde Hichilema’s new cabinet was elected, with a strong campaign pledge to improve the economy and restore fiscal health.
Hichilema’s administration won a staff level agreement with the International Monetary Fund for a $1.4 billion economic structural adjustment program just a few months after taking office (IMF).
As part of the agreement, the country raised pump prices by a fifth this month, pending board approval, after cutting fuel subsidies that had kept costs artificially steady for two years.
In addition to an imminent 13 percent hike in power prices, gasoline and fuel prices will be evaluated every 30 days instead of bimonthly.
“While the year 2022 may be difficult, the people of Zambia will praise us and say ‘well done New Dawn government,’ in 2023.” Felix Mutati, a former finance minister who currently serves in a different capacity in Hichilema’s cabinet, recently told state television.
The local currency, the kwacha, is concluding the year with a roughly 7% rise against the US dollar, with the central bank predicting inflation to average 15% next year and 9.3% in the first three quarters of 2023.
The country’s economy has a good long-term outlook, especially if Hichilema’s administration keeps its campaign pledge of weeding out government corruption and spending public funds wisely.
Why is Zambia’s inflation so high?
Zambia’s economy has entered a deep recession as a result of the COVID19 pandemic. After expanding by 4.0 percent in 2018 and 1.9 percent in 2019, real GDP is expected to decline by 4.9 percent in 2020. The drop in output is the result of an exceptional decline in all of the economy’s core sectors. Manufacturing output plummeted as supply networks were disrupted, and the service and tourist industries suffered as private consumption and investment declined as a result of COVID19 containment measures. Despite production problems in South America, mining output is rising after initially declining due to reduced global demand for copper. Continued increases in commodity prices above the current estimate could result in a slower economic downturn. Even before the epidemic, the economy was facing major macroeconomic problems, including rising inflation, expanding fiscal deficits, unsustainable debt levels, low international reserves, and constrained liquidity. Despite the government’s efforts to use monetary easing in 2019 and 2020, price levels and the banking sector have not stabilized. Inflation has been rising, owing to the pass-through effects of the kwacha’s depreciation as well as higher food and transportation costs. Inflation soared to 17.4 percent in 2020 after the outbreak of COVID19, and is expected to remain over the goal range of 6 percent to 8% in 2021. Due to copper price and output volatility, growing public debt payments, and increased nonoil imports, the external situation deteriorated in 2020, with declining reserves (averaging 1.6 months import cover) and will remain weak in 2021. Despite dwindling income, the government’s pursuit of an expansionary fiscal strategy for public investments has resulted in widening fiscal deficits (8.3 percent of GDP in 2019 and 11 percent of GDP in 2020). Zambia’s public and publicly guaranteed debt reached 91.6 percent of GDP in 2019 and 104 percent in 2020 as a result of its expansionary fiscal policy, which was mostly financed by foreign and local borrowing. In the medium future, it will remain high.
The economy is expected to increase by 1.0 percent in 2021 and 2.0 percent in 2022, with the mining, tourism, and manufacturing sectors leading the way. Positive factors include a resurgence in foreign demand and copper prices, as well as a drop of COVID19 cases, which will help industrial and tourism activity. However, there is a significant chance that a second wave of the pandemic may obstruct global economic recovery and restrict copper demand. A second wave could also jeopardize the recovery of vital industries like tourism and manufacturing. Failure to effectively implement the Economic Recovery Programme, which is designed to address the majority of Zambia’s important economic constraintssuch as debt sustainability and macroeconomic environment stabilizationcould put the country’s economy at risk. The ratio of non-performing loans in the banking sector is likely to rise, contributing to a drying up of bank liquidity and depressing private sector activity. Poverty is predicted to rise as a result of considerable job losses in the service industry (30.6 percent on average), manufacturing (39%), personal services (39%), and tourism (39%). (70 percent ).
Zambia’s public debt stock reached an unsustainable 104 percent of GDP on September 30, 2020, and is likely to rise marginally in 2021 before falling in the medium term due to enhanced fiscal and monetary policy coordination, as stated in the Economic Recovery Programme. Zambia must stop amassing new external debt, improve domestic income, rein in reckless public expenditure, and build a better institutional public financial management framework to achieve debt sustainability. To prevent a catastrophic cash constraint, the government has launched a creditor engagement plan targeted at obtaining prompt debt service relief from its external creditors.
What is the current rate of inflation in 2022?
Inflation in the United States was substantially overestimated by forecasters in 2021. The initial spike in inflation was greeted with hope. Most analysts predicted that supply chain disruptions due by the epidemic would be brief, and that inflation would not endure or climb further. People were confident that inflation would not become self-perpetuating after three decades of low and stable inflation.
Between February and August 2021, projections suggested that inflation will grow in 2021, but then fall to significantly lower levels in 2022, with personal consumption expenditures inflation near to the Federal Reserve’s 2% objective.
However, data from the last few months has shattered that optimism. Inflation was previously restricted to product categories with obvious supply shocks, but it is now widespread, with anecdotal evidence of earnings pursuing higher prices and prices adjusting for increasing expenses. Forecasters had lowered inflation predictions for 2022 to 3.1 percent by February 2022. Energy price shocks from Russian sanctions will almost certainly lead to more higher revisions.
When it comes to effectively forecasting future inflation, the stakes are considerable. This is crucial for assessing how quickly monetary policy should return to a neutral position in order to prevent a scenario of sustained inflation, which would necessitate further tightening in the future and risk another recession.
What is the inflation rate for 2021?
The United States’ annual inflation rate has risen from 3.2 percent in 2011 to 4.7 percent in 2021. This suggests that the dollar’s purchasing power has deteriorated in recent years.
What is the present source of inflation?
They claim supply chain challenges, growing demand, production costs, and large swathes of relief funding all have a part, although politicians tends to blame the supply chain or the $1.9 trillion American Rescue Plan Act of 2021 as the main reasons.
A more apolitical perspective would say that everyone has a role to play in reducing the amount of distance a dollar can travel.
“There’s a convergence of elements it’s both,” said David Wessel, head of the Brookings Institution’s Hutchins Center on Fiscal and Monetary Policy. “There are several factors that have driven up demand and prevented supply from responding appropriately, resulting in inflation.”
What country has the highest rate of inflation?
Venezuela has the world’s highest inflation rate, with a rate that has risen past one million percent in recent years. Prices in Venezuela have fluctuated so quickly at times that retailers have ceased posting price tags on items and instead urged consumers to just ask employees how much each item cost that day. Hyperinflation is an economic crisis caused by a government overspending (typically as a result of war, a regime change, or socioeconomic circumstances that reduce funding from tax collection) and issuing massive quantities of additional money to meet its expenses.
Venezuela’s economy used to be the envy of South America, with high per-capita income thanks to the world’s greatest oil reserves. However, the country’s substantial reliance on petroleum revenues made it particularly vulnerable to oil price swings in the 1980s and 1990s. Oil prices fell from $100 per barrel in 2014 to less than $30 per barrel in early 2016, sending the country’s economy into a tailspin from which it has yet to fully recover.
Sudan had the second-highest inflation rate in the world at the start of 2022, at 340.0 percent. Sudanese inflation has soared in recent years, fueled by food, beverages, and an underground market for US money. Inflationary pressures became so severe that protests erupted, leading to President Omar al-ouster Bashir’s in April 2019. Sudan’s transitional authorities are now in charge of reviving an economy that has been ravaged by years of mismanagement.
Is Zambia wealthy or impoverished?
Zambia, a southern African country with a population of 15.5 million people, has one of the continent’s fastest-growing economies because to copper mining and agricultural diversification. Despite its economic progress, Zambia remains one of the poorest countries in the world, with 60% of the population living below the poverty line and 40% of those living in extreme poverty. Zambia is still grappling with widespread poverty, owing to its rapidly rising population and high youth unemployment rates. The top ten facts concerning Zambian living conditions are mentioned in the article below.
Top 10 Facts About Living Conditions in Zambia
- According to Habitat for Humanity, roughly 64% of Zambians live on less than $2 per day, with the poorest living on less than $1.25. Living in Lusaka, the country’s capital, is, nonetheless, more expensive than living in Washington, D.C., due to the country’s rapidly rising economy.
- Zambia is rapidly urbanizing as a result of improved employment and income prospects. The present urban housing deficit is estimated to be over 1.3 million units. By 2025, this number is predicted to rise to 3 million housing units. According to reports, nearly 70% of the metropolitan population lives in slums with serious water and sanitation issues due to a lack of housing. For decades, Habitat for Humanity has worked to alleviate housing poverty in the United States. This has helped over 3,500 families, as well as countless Zambians, improve their living conditions.
- Zambia’s fertility rates are increasing. The stated fertility rate was 5.2 percent of children per woman between 2013 and 2014. According to the United Nations, Zambia’s population is expected to grow by 941 percent by the end of the century, making it Africa’s fastest-growing country.
- Zambia has an insufficient sewage system in many locations, and many Zambians do not have access to a proper toilet. According to National Public Radio (NPR), roughly 6.6 million Zambians do not have access to a proper toilet. Pit latrines cover about 45 percent of Lusaka, indicating that the country has a serious sewage problem. When the pits are full, the local government either empties them or the owners simply fill them up and build new ones.
- In Zambia, it is estimated that 4.8 million people do not have access to clean water and rely on feces-contaminated rivers and lakes. The polluted water is consumed and used to cook food, resulting in diarrhea and cholera. WaterAid, on the other hand, is assisting countries like Zambia in gaining access to safe drinking water, adequate sanitation, and appropriate hygiene.
- Every year, around 2,000 children under the age of five die as a result of contaminated water and inadequate sanitation. More than 3,500 new-born babies died in Zambia in 2013 as a result of diseases linked to contaminated water, according to statistics.
- Zambia is one of 20 countries that have committed to abolishing child marriage by 2020. Around 6% of Zambian girls marry before they reach the age of 15. Child marriage rates, on the other hand, have dropped from 42% to 31% in 2014. Zambia has approved the National Strategy on Ending Child Marriage in Zambia to minimize the rate of child marriage.
- For many decades, Zambia, like many other African countries, has struggled with hunger. Chronic malnutrition affects around 1.12 million Zambian children under the age of five. Furthermore, anemia affects roughly 60% of Zambian children under the age of five.
- According to the Centers for Disease Control and Prevention (CDC), HIV/AIDS and tuberculosis (TB) are the leading causes of death in Zambia. AIDS-related deaths, on the other hand, have decreased by more than a third. In addition, the number of young infants infected has decreased from 14,000 in 2005 to 7,300 in 2017.
- Zambians now have more access to education than ever before. However, education is still of poor quality. USAID is working to improve the quality of education by establishing educational programs that focus on student and teacher performance.
Zambia’s economy is quickly improving. Living conditions, on the other hand, haven’t changed much in recent years. People continue to struggle to get essential survival supplies and live in filthy conditions, which contribute to the spread of chronic diseases. One of the negative consequences of the increasing economy is that it has exacerbated the gap between rich and poor. Despite the country’s improving economy, 60% of the population is still unable to make ends meet. However, Zambians’ living conditions can improve if the government focuses on establishing initiatives that reduce congestion, enhance education quality, and assist in providing clean water to all citizens. Zambia’s economy may have improved, but the fight against poverty has only just begun.
Is Zambia Africa’s poorest country?
- To create a healthy and skilled workforce, provide public services and social protection.
Zambia is one of the countries in the world with the greatest levels of poverty and inequality. More than 58 percent of Zambia’s 16.6 million inhabitants earn less than $1.90 per day in 2015 (compared to 41 percent across Sub-Saharan Africa), and three quarters of the impoverished live in rural areas.
In Zambia, IFC maintains a sizable portfolio, primarily in agricultural, financial services, and manufacturing. The present IFC portfolio in Zambia consists of 13 projects for a total of $86.5 million, including a $55.9 million investment portfolio and a $155.8 million pipeline.
MIGA is also assisting Zambia in its growth. In Zambia, MIGA pledges total $106 million, with guarantees assisting agriculture, livestock, and aquaculture development. A MIGA guarantee for Agrivision Africa (formerly Chayton Africa) is assisting a large commercial farm in the Copperbelt Province in implementing efficient agricultural practices and expanding the capacity of a grain-processing facility, resulting in a significant demonstration effect for other farms.
MIGA has also aided the Silverlands Fund through a multi-country Master Reinsurance Contract with the Overseas Private Investment Corporation in Silverlands Ranching Limited, which is assisting in the improvement and development of a major cattle farm in Zimba, Southern Province.
Zambia has pledged to implement policy reforms in order to boost regional commerce. The country is a member of the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA), both of which promote regional trade. Zambia has fared admirably across the board in the regional integration rating, ranking second in COMESA and fourth in SADC.
Zambia’s location in Southern Africa, where it is bordered by eight nations, raises the potential of diseases being imported from those countries and beyond. This is due to the fact that Zambia is a key transportation route for both import and export goods, as well as a destination and transit point for labor migrants, asylum seekers, illegal migrants, and human trafficking victims in the region.
Zambia’s reaction to the COVID-19 outbreak will be aided by a $25 million loan from the World Bank. The Crisis Response Window will contribute $20 million, while the Global Financing Facility for Women, Children, and Adolescents will contribute $5 million (GFF). Zambia COVID-19 Emergency Response and Health Systems Preparedness Project will receive the money.
What is Zambia’s current economic situation?
Focus on Zambia’s Economic Growth GDP is expected to expand 2.8 percent in 2022, up 0.1 percentage points from last month’s prediction, and 3.0 percent in 2023, according to economists.
What is a doctor’s pay in Zambia?
The almost 300-strong ResidentDoctorsAssociation (RDA) went on strike for two days last week, demanding improved salary and working conditions. Many returned to work after the government promised to a pay increase of 120 percent to 300 percent, but they are skeptical that the government will follow through on the agreement.
“We conducted research in the area to determine how much our coworkers make. At the region, a doctor with our skills earns around US $2,000 and works in a hospital that has drugs to dispense to patients… We have no drugs and are severely underpaid, yet the government refuses to address these issues “Dr. Ameck Kamanga, the RDA’s president, told IRIN.
According to the Jesuit Centre for Theological Reflection, which collects data on Zambia’s cost of living, a family of six requires approximately $200 per month to pay the cost of a “basicneeds basket.”
After seven years of training for a medical degree, a Zambian doctor gets a gross salary of roughly US $489 before 30% income tax deductions. Most doctors work part-time at private clinics to supplement their income, earning between $20 and $25 every five-hour shift.
“We are frequently and chronically out of drugs, particularly antibiotics, and our equipment is outdated.
We have to make do with improvised medicine and equipment, despite the fact that the government, through the Central Board of Health, is well aware of our complaints “Kamanga remarked.
Despite the fact that the physicians have returned to work, they have threatened to go on indefinite strike if the government does not honor the compensation deal. They claim that last week’s strike was sparked by the government’s 25% increase in response to their demand for a 120 percent to 300 percent increase.
“Because of this indifference to the requirements of doctors, the majority of our colleagues are fleeing to Namibia, South Africa, and Botswana, where they are valued. Many doctors requested for my guarantee that everything would be well before moving to Namibia or another destination, and they were disappointed when the RDA offered them false hope, so they are already packing and ready to go “Kamanga stated.
Dr. Ben Chirwa, the director of the CBOH, has informed the RDA that their issues will be “resolved” by the end of the month.