Government measures help kwacha strengthen

Zambia's economy is facing uncertainty as the International Monetary Fund (IMF) slashes its growth forecast for the country in 2024. The weakening economic forecast comes at a time when the Zambian kwacha has shown some strength in the currency markets, following a period of matched demand and supply. Musenge Komeki, Head of Sales in the Global Markets Division at Stanbic Bank Zambia, provided insights into the factors driving the recent movements in the kwacha. Komeki highlighted that the slowdown in industries due to power shedding has reduced the demand for imports, leading to a decrease in the demand for dollars. Additionally, the lack of central bank intervention in the market has contributed to the kwacha's stability since July. However, Komeki expressed concerns about the sustainability of this strength, citing potential weaknesses in the coming months. He noted that without a strong fiscal program and with anticipated inflationary pressures due to drought and high power import costs, the Bank of Zambia may face challenges in deciding on future monetary policy adjustments. Komeki emphasized the importance of early rains to help mitigate inflation risks. Despite these challenges, he remained hopeful for a stronger support level in 2017. The uncertainty surrounding Zambia's economic outlook underscores the need for proactive measures to address key issues and support sustainable growth.