Bwalya Ngandu

Zambia’s 2020 GDP projected at minus 4.2%

Zambia’s Gross Domestic Product (GDP) growth for 2020 has been revised downwards from an initial positive growth of at least 3 per cent to a new forecast indicating negative growth of around minus 4.2 per cent, finance minister Dr Bwalya Ng’andu has told Parliament.

Delivering a ministerial statement in Parliament on Tuesday on the performance of the economy amid the Covid19 pandemic, the minister said the impact of COVID-19 has also resulted into the dampening of commodity prices such as copper and depreciation of the Kwacha against major trading currencies.

“The effects of Covid-19 have indeed filtered through most economies by way of health shocks, domestic economic lockdowns, reduced exports, capital flow reversals and lower commodity prices. The Ministry has continued to review the performance and the projected growth of the economy amid the Covid-19 pandemic. Analysis conducted indicates that the Covid pandemic will have an adverse impact on the economy,” Dr Ng’andu said .

“Consequently, the projected growth in Zambia’s Gross Domestic Product (GDP) has been revised downwards from an initial positive growth of at least 3 percent to a new forecast indicating negative growth of around minus 4.2 percent. Primary and secondary sectors such as mining, energy, construction and manufacturing are all expected to record poor performance. Service sectors including wholesale and retail trade, tourism, transport, and professional services are equally expected to underperform.”

He said the exchange rate of the Kwacha against the United States Dollar depreciated by 26 percent from K14.38 per US Dollar in December 2019 to K18.09 per US Dollar on 13th July, 2020.

“The pass-through effect of the Kwacha depreciation has further led to an increase in inflation to 16.6 and 15.9 percent in May and June 2020 respectively. This is compared to 11.7 percent recorded in December, 2019. In addition, the outbreak has also led to the disruption of supply chains and creation of uncertainties within the market place,” Dr Ng’andu said.

He said the the estimated budget resource of 2020 will fall short of target by K17.2 billion.

” The budgetary shortfall will be on account of the following; a revenue reduction of K12.8 billion arising mainly from the loss of exceptional revenue which was anticipated, Covid related tax relief measures and the general reduction in economic activity; and External Financing of K4.35 billion no longer expected to materialize. Domestic revenues in 2020 are projected to be 17.8 percent below the budget target. Tax revenues are now projected at K47.0 billion against a budget target of 53.9 billion representing a decline of 12.7 percent,” he said.
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