Zambia Business Forecast Report Q1 2013 - New Study Released

New Country Reports market report from Business Monitor International: "Zambia Business Forecast Report Q1 2013"

by Bill Thompson

(WireNews+Co) - Boston, MA - 30 January 2013

Core Views

A decline in copper production in recent months will weigh on net exports and by extension the current account; however, we estimate that growth in 2012 still accelerated versus 2011, and is poised for further gains in 2013.

The ruling Patriotic Front continues to consolidate power, both through legislative by-elections as well as through behind-the-scenes political wrangling which has weakened the opposition. The newly presented 2013 budget aligns with the party's objectives to generate employment and improve public service delivery.

Major Forecast Changes

No major forecast changes.

Key Risks To Outlook

The most salient risks to Zambia's economy stem from global economic developments which directly impact the price of copper, Zambia's chief export, as well as the appetite for frontier market investment. If struggles in Europe, China, and other major markets are better or worse than we currently anticipate, then our forecasts would be rendered either too optimistic or too negative.

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We again stress that we believe that President Michael Sata understands the importance of maintaining good relationships with foreign businesses and other private sector stakeholders. However, if his policies take a populist turn, as some suspect they could, our projections for investment and growth would need to be revised.

Partial Table of Contents:

Executive Summary

Core Views

Major Forecast Changes

Key Risks To Outlook

Chapter 1: Political Outlook

SWOT Analysis

BMI Political Risk Ratings

Domestic Politics

Division, Betrayal And Electoral Defeat Hammer Opposition

- The prominence and power of the principal opposition parties have weakened in recent months following a series of by-elections and political manoeuvres which have seen the ruling Patriotic Front (PF) gain ground.

TABLE: ZAMBIA POLITICAL OVERVIEW

Long-Term Political Outlook

A Question Of Policy, Not Politics

- Zambia boasts a competitive political environment that has been characterised by closely contested and increasingly freer and fairer elections (according to observers).

Chapter 2: Economic Outlook

SWOT Analysis

BMI Economic Risk Ratings

Economic Activity

Copper-Supported Growth To Pick Up In 2013

- The outlook for the Zambian economy remains bright, as major investments into the economy help bolster exports and stimulate private consumption. Although there are significant risks stemming from the global economy - particularly the slowdown and rebalancing in China - we expect that Zambia will achieve 7.1% growth in 2013, compared to an estimated 6.9% in 2012.

TABLE: ECONOMIC ACTIVITY

Balance of Payments

Decline In Copper Output To Weigh On BoP

- The recently released data which show that year-to-date copper production is still below corresponding 2011 levels are in line with our expectations, and we have kept our balance of payments forecasts unchanged.

TABLE: CURRENT ACCOUNT

BoZ Rate To Inch Up In 2013

- The Bank of Zambia has elected to hold its benchmark policy at 9.25%, as inflation remains close to its target of 7.0% and growth continues to be robust.

TABLE: MONETARY POLICY

Fiscal Policy

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