Editor's Comment

Base economy analysis on facts

RECENTLY, reports quoting some economic experts have been published claiming that Zambia’s economy is in a crisis.
These reports also claim that the country’s debt has reached a crisis stage and cannot be managed.
While it is appreciated that we live in a free democracy with guaranteed freedom of expression, it is important for Zambians to be factual especially when commenting on matters of high importance.
When debating complex issues of economic nature there is need for people to detach emotions and present facts objectively. This is what is expected of patriotic citizens.
We should not take pride in being prophets of doom by focusing on negative aspects ignoring the positive gains in our economy.
Yes, our economy may not be where we would want it to be because of some challenges, but to say we are in a crisis is certainly an exaggeration.
It is heartening that this is the view that is also held by economic experts of high repute like the Economics Association of Zambia (EAZ).
According to EAZ chairperson Lubinda Haabazoka, insinuations that Zambia is in a crisis are not real because there is a standard definition for a country to go into a crisis.
“First of all, to go into an economic crisis mostly countries normally go into recession. A recession is defined as posting negative growth for two consecutive quarters in a year. So your GDP shrinks consecutively twice and we have not seen that in Zambia. GDP is around 4 percent indicating that the economy is growing though for a country like Zambia you need about eight or 10 percent for you to say you are growing very well. Overall the GDP growth reflects what is obtaining on the continent,” Dr Haabazoka said.
There are various indicators that determine whether the economy is on a positive trajectory or not.
As rightly indicated by Dr Haabazoka, the country’s GDP has not in the recent past posted any negative growth for two consecutive quarters in a year to warrant declaration of an economic crisis.
The inflation rate has maintained a single digit of between six to eight percent, which is a positive indicator for the economy.
If indeed there is a crisis in the country, the inflation rate could have escalated and subsequently prices of goods and services would have shot up.
The Kwacha has also remained relatively stable against major convertible currencies, trading at an average of K9.93 per US$.
According to a recent update given by the Ministry of Finance on the economic performance for the first half of the year, the trade deficit during the first five months of 2018 continued being positive with a surplus of K245.4 million recorded in May 2018.
A recovery in the performance of non-traditional exports (NTEs) in the recent past has been recorded. The share of NTEs averaged 22.9 percent in export earnings between May and April 2018.
In view of this positive performance, it is expected that the current account balance will further narrow down in 2018 and become positive over the medium term.
While four years ago interest rates had skyrocketed to about 40 percent, they have been falling with a current average lending rate at 25 percent.
We could not agree more with EAZ that, though still prohibitive, the continued drop in lending rates attests to positive economic growth.
Some critics have pegged their argument on the country’s debt stock which stood at US$9.37 billion by end of the first half of the year stating that it has reached unsustainable levels.
EAZ assures that as long as the country is still able to service its debt in the short and long term, it cannot be considered a crisis.
Economic experts, however, advise that Government needs to come up with a refinancing strategy for the eurobonds which are supposed to be paid in bullet form, with the first one amounting to US$750 million maturing in 2022.
The high number of business start-ups is also an indicator of a healthy and growing economy.
In recent years we have also witnessed unprecedented levels of growth in the construction sector. More houses, offices, hospitals, schools and roads have been constructed.
The Zambia Revenue Authority collections have also continued to be above target, which is a good indication.
Given all these indicators and many others, it is ridiculous for anyone to stand on a podium and declare that the country is in an economic crisis.
Yes, challenges are there but we are not in a crisis.
While at macro level economic gains are evident, there is also need to ensure that they trickle down to the common man.
This is not Government’s role alone. Other stakeholders, like the private sector, must do more to ensure that economic gains are enjoyed by all regardless of status in society.

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