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The Zambian Economy
Having successfully transformed to a market orient-
ed economy, the focus of the country is on attracting
domestic and foreign investments in order to exploit
available opportunities, expand the economy and
create job opportunities.
Performance of the Economy
The Zambian economy has performed very well over
the last few years. Economic growth as measured
by the gross domestic product (GDP) has grown by
more than 5 percent per annum since 2003. Even
in the midst of the economic challenges that came
with the global economic meltdown, the Zambian
economy performed strongly registering growth of
6.4 percent in 2009 and 7.6 percent in 2010.
Zambia’s external sector has continued to strength-
en with exports of goods and services increasing
from US$2.2 million in 2005 to US$7.3 million in
2010 and the trade surplus growing to US$2.7 mil-
lion in 2010. The increase in exports earning is at-
tributed to the increase in the volume of exports of
copper and the non-traditional exports as well as
the favourable commodity prices on the international
market. The gross international reserve position
has thus improved from US$222.0 million in 2004
to close to US$2.0 billion or four months of import
cover in 2010.
Following the debt relief that the country accessed
under the Highly Indebted Poor Countries Initia-
tive (HIPC) and the Multilateral Debt Relief Initia-
tive (MDRI), Zambia’s debt situation has remained
within sustainable limits. Most of the debt that has
been procured in recent years has gone into private
sector investments to expand the productive capac-
ity and that contracted by the public sector has been
directed towards infrastructure development.
The favourable trends in the economy have been
K/US $ EXCHANGE RATE & ANNUAL INFLATION
driven by strong development in the mining, agri-
culture, construction and manufacturing sectors fol-
lowing the increased investments in these sectors.
The positive strides achieved on the economic front,
have also been reflected in the recent B+ ratings by
two international ratings agencies, Fitch and Stand-
ard and Poor’s.
In terms of foreign direct investments (FDI), the
mining sector has recorded the highest amount of
investments with the FDI recorded at more than
US$4.5 billion by the end of 2009. This is followed by
the manufacturing and banking sectors whose stock
of FDI in 2009 stood at US$1.2 billion and US$0.6
billion, respectively.
The investments in existing and new mines have re-
sulted in copper production increasing rapidly from
250,000 metric tonnes in 2000 to reach the highest
copper output of 767,000 metric tonnes in 2010. It is
expected that copper output will continue to increase
and exceed the targeted 1 million tonnes per annum
by 2015.
In the agriculture sector, the country has recorded
significant achievements with the production of the
staple maize crop increasing by 48 percent from 1.8
million tonnes in 2009 to 2.8 million metric tonnes in
2010. Production of other crops such as sorghum,
rice, groundnuts, Irish potatoes, mixed beans and
sweet potatoes has also increased.