Economic growth prospects downgraded to 2.3% for 2024 – BoZ

Economic growth prospects downgraded to 2.3% for 2024 – BoZ

The Bank of Zambia – BoZ says the economic growth prospects for 2024 are not as bright with growth significantly downgraded to now 2.3 percent from the earlier projection of 4.4 percent on account of the expected impact of the currentdrought, with agriculture and energy (electricitysupply) being the most adversely affected sectors.

Speaking during the 1st quarter monetary policy announcement attended by the Zambian Business Times – ZBT, Bank of Zambia Governor Dr. Denny Kalyalya noted that economic activity had even reduced in the first quarter of 2024due to the escalation of inflationary pressures induced by a weaker exchange rate and the drought, which weighed on output for firms especially, in manufacturing and agriculture sectors.

Dr Kalyalya said Growth is expected to rebound in 2025,attributed to the recovery in mining andagriculture sectors, and sustained expansion of
ICT, financial and insurance, as well as wholesale and retail trade sectors.

Meanwhile, BoZ Governor disclosed that the the MPC decided to raise the Monetary Policy Rate by 100 basis points to 13.5 percentto augment earlier actions aimed at steering inflation towards the 6-8 percent targets band and anchor inflation expectations.

Dr. Kalyalya explained that this is because uncontrolled inflation and failure to address persistent inflationary pressures will undermine macroeconomic stability and all other efforts being taken to address the current economic shocks the country faces, maintaining financial stability,
and creating an environment that promotes productive lines of investment.

“The Committee noted that the current drought has led to a significant downgrade ofdomestic growth forecast for 2024 with agriculture and energy (electricity supply)being the most adversely affected sectors.” He said.

Meanwhile, the Bank of Zambia Governor disclosed that the Bank provided marketsupport of US$369 million to moderate volatility and broadlysupport the importation of criticalcommodities.

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