Economic Outline

Economic Indicators

Despite a historic drought and pessimistic forecasts, Zambia’s economy demonstrated resilience. Still recovering from the COVID-19 recession, the country endured its worst drought in over two decades during the 2023/2024 rainy season, worsened by the El Niño weather pattern. Real GDP growth, which averaged 5.6% from 2021 to 2023, was estimated at 4% in 2024 as mining production grew for the first time in three years, rising by 12%, driven by the resumption of operations at Konkola Copper Mine, improvements at Mopani, and higher output from several other mines. This, along with growth in construction and services, helped sustain the overall GDP expansion. According to the World Bank, real GDP growth is projected at 6.2% in 2025 and 6.6% on average in 2026-27, driven by strong agricultural harvests, improved reservoir levels, and higher electricity generation. Growth will be supported by momentum across agriculture, mining, agrifood processing, and services linked to mining, agriculture, and tourism.

Preliminary figures show an improved fiscal position in 2024, with a budget deficit of 2.7% of GDP, driven by revenue growth from mining and resilient performance despite limited spending on goods, services, and capital due to constrained domestic financing. The proposed 2025 budget is ZMW 217.1 billion, equivalent to 26.6% of GDP, up from the revised 2024 budget of ZMW 202.1 billion (30.8% of GDP). The 2024 revision marked a ZMW 24.2 billion increase over the original budget of ZMW 177.9 billion (27.8% of GDP), representing a monetary rise of 7.4%. Higher domestic interest payments and resumed Eurobond debt servicing increased interest costs, crowding out productive spending. Debt restructuring is nearing completion after four years. However, the prolonged process has increased sovereign risk, discouraged foreign direct investment, weakened the local currency, and contributed to inflation, especially during the drought. Debt restructuring agreements with official bilateral creditors in October 2023, international bondholders in June 2024, and recent in-principle agreements with two major Chinese private creditors have resulted in agreements on over 90% of the debt to be restructured. Completing this process and implementing policy reforms, including debt management and energy sector improvements, should support Zambia's long-term fiscal sustainability. Meanwhile, gross international reserves increased from 3.4 months of imports in 2023 to 4.1 in 2024, supported by mining receipts and external financing from multilateral organizations. According to the Bank of Zambia, inflation was projected to average around 15% in 2024 driven by higher food prices and exchange rate depreciation (over 30% in 2024), with a slightly lower but still elevated projection of 13.9% for 2025. In February 2025, the monetary policy committee hiked the rate to 14.5% from 14%, its highest level in more than eight years.

While Zambia achieved lower middle-income status in 2011 after a decade of strong growth, the decline in Gross National Income (GNI) per capita led to Zambia's reclassification as a low-income country by the World Bank starting from the 2023 financial year. Despite its enormous economic potential linked to mining resources, poverty is widespread (63.1% of the population in 2024) and is compounded by a high birth rate and a relatively high burden of HIV/AIDS (one in ten Zambians has the virus). In 2024, the unemployment rate in the country was at 6% (World Bank), with youth unemployment being particularly high, leading more young people in Zambia to venture into businesses to counter unemployment. The country’s GDP per capita (PPP) was estimated at USD 4,260 in 2024 by the IMF.

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