Zambia's headline inflation rose to 23.2% in May

Zambia's headline inflation has skyrocketed to 23.2% in May, far exceeding projections and raising concerns about the country's economic stability. Ridle Markus, Africa Strategist at Absa Corporate and Investment Banking, provided valuable insights into Zambia's current economic challenges and prospects for the future. Markus pointed out that Zambia's economy has been in a fragile state for the past 18 months, with a contraction of about 3% in the previous year. The high inflation rate of 23.2% reflects the soaring living costs in the country, making it challenging for the economy to recover at a rapid pace. While the central bank has indicated some signs of recovery, the overall conditions remain challenging, with sluggish growth expected at around 1.5% this year. Markus emphasized that Zambia lags behind other markets in the region, such as Kenya and Ghana, which are experiencing higher growth rates. However, there is hope for improved momentum post-elections and potentially with the support of an IMF program, especially with positive performance in the mining and agriculture sectors. Tanzania, on the other hand, is taking proactive steps to boost its economy by securing financing for key projects totaling $875 million from the World Bank. The country's President, Samia Suluhu Hassan, is committed to enhancing the business environment to attract more foreign direct investment and drive economic growth. Markus expressed optimism about Tanzania's growth prospects, expecting a growth rate above 5% this year and a potential increase to 7% over the next two years with the support of multilateral funding. In contrast, Markus discussed Ghana's economic outlook, noting a rise in the stock of debt despite ongoing economic recovery efforts. He predicted that Ghana's policy rate would remain unchanged, given the recent decline in inflation rates. The country's economy is expected to grow by around 4.5% this year, supported by investments in the energy sector and infrastructure. Ghana aims to reduce its fiscal deficit significantly and achieve a growth rate of at least 5%. Markus underscored Ghana's potential for robust growth, particularly with the support of the oil and gas industry. Overall, while Zambia faces challenges with high inflation and slow growth, Tanzania and Ghana are actively pursuing strategies to enhance their economies and attract investments for sustainable development.