Yohane Mbeeya Moono
An Alumni of the Zambia Institute of Diplomacy and International Studies
The Zambian Minister of Finance and National Planning on 30th September, 2022 presented the country’s National Budget for the year 2023. A number of interesting economic pronouncements were made in the National Budget.
Among them is the projected real Gross Domestic Product value Growth rate of 4%. The country’s economy in the year 2022 grew at 3.5 % rate which is more than the earlier projected 3.1% growth rate. The positive growth was attributed to the stability in the exchange rate of the country’s currency against major convertible currencies in the World. Fundamentals that had been put in place for the country try to reduce the annual inflation rate from 24 % in August of 2021 to 9.8 % in August of 2022.
In the 2023 National Budget, the Minister of Finance and National Planning indicated that the country targets to grow its economy at 4% growth rate. This seems a very unrealistic target looking at the growth rate the country achieved in 2022. However, it must be understood that a number of factors are likely to slow or accelerate the growth of the economy.
The World Bank and the International Monetary Fund have projected the Growth rate of the Emerging and Developing economies globally at 3.7%. This is a more realistic target for the growth rate given that most developing and emerging economies are usually adversely affected by the negative economic trends that come to the fore. The Brentwood Institutions have also projected that the global economic is expected to grow at 2.7% growth rate while advanced economies are expected to grow at 1.1% growth rate.
For example, the Russia-Ukraine has negatively affected most developing countries due to the instability in the provision of key economic drivers, which is the pricing of Oil on the international market. The price has perpetually fluctuated ever since the war broke out. Additionally, when the Covid-19 pandemic broke out and slowed economic growth, the developing and emerging economies were the worst hit.
Secondly, most developing countries are highly indebted. Most African countries spend about 16% of the revenue collection on Debt Servicing which robs the countries from real economic investment in areas of production. Many Developing and Emerging economies have not increased productivity due to Debt Servicing. This is why the move by the government of Zambia to apply for Debt Restructuring and Suspension is a genius move given the circumstances most developing and emerging economies have found themselves in. Chad, Ethiopia and Kenya are seeking similar interventions as the Zambian government in order to emerge stronger from their impregnable debt positions.
The Global economic outlook entails that Developing and Emerging economies need to investment in productivity in order to stem the unforseen economic shocks that most of the time derail real Gross Domestic Product value Growth.