Zambia National Commercial Bank – Zanaco has projected that the introduction of the Goods and Service Tax – GST will result in the country’s inflation to rise to a double digit through to 2020 while the currency is likely to depreciate to 13 kwacha per USD.
Giving a presentation on the Economic Outlook for the First Quarter of 2019, Zanaco Head of Economics and Research Dr. Patrick Chileshe said the Implementation of good and service tax is going to result in an elevated cost of production for most entities. Most entities will aim to pass on the costs to the next person in the line of production or consumption resulting in higher prices.
The commercial bank has projected a number of risks which are likely to affect the growth of the economy in 2019. This includes the fiscal challenges that are ongoing especially with respect to debt service obligation as it has been observed that government’s debt service have been increasing causing negative effect on the aggregate demand of goods and services.
The rising levels of debt service will also have a negative impact on government ability to finance other sectors of the economy as this will hurt private economic activities resulting in slower growth for the year 2019.
The level of production in the Agro sector is 2019 is also likely to be poor compared to last year despite having good rains in the northern part of Zambia as much of the maize is cultivated on the southern part of Zambia.
Dr. Chileshe has also warned that low water levels in the Kariba dam may result in low electricity supply and load shading that will inturn result in low production in the manufacturing and mining sector.
The Zanaco Head of Economics however stated that despite the many challenges and risks identified; Zambia still have the chance to experience economic growth provided the right economic tools and interventions are put in place.
