MACRO-ECONOMICS
THE ZAMBIA CASE STUDY-PART ONE
In Macroeconomics, we attempt to study the effects of various government policies on the nations output. The intended effect is that such policies should increase society welfare whether in the short run or the long run. Among other things, macroeconomics attempts to provide summary statistics about the economy that are useful for policy makers and the general public so as to know whether the policies are achieving the intended results. Economist use different devices such as the Gross Domestic Product, Inflation rate, unemployment rate among others as a means of getting an understand of a nation’s economic performance. This issue intends to provide an in-depth understanding of such tools of measuring economic performance. This issue will particularly focus on Zambia, a lower middle-income country (as of 2011) and Africa’s second largest producer of copper.
Gross Domestic Product is perhaps the most important of indicator of economic performance. In simple terms, it can be defined as the total value of all the goods and services produced in Zambia. In another way, it is the total value of all the transactions that take place within Zambia during a period of one year. Higher GDP represents higher levels of production. The Gross Domestic Product (GDP) in Zambia was worth $27.50 billion US dollars in 2019 according to official data from the World Bank. This represents only 0.02 percent of the world’s GDP. This is a droplet compared to the largest economy is the world, The USA, with a GDP of over $21.428 trillion, It accounts for 15.2 % of world GDP. Zambia’s Economy has been has generally been growing each year, for example, the economy has grown by over 87.6% since 2000 when the GDP was only $3.41 billion. The nations GDP is projected to be $30.63 billion by 2024.
The Zambian government
made an essential move towards privatisation and open market economy. This
reduced Zambia’s heavy dependence on copper, leading to a growing trend towards
non-traditional exports including agro-processing, primary products and
textiles. This brought about a multisectoral approach to economic development.
It was not just about mines, but about Agriculture, manufacturing and services
industries too. The World Bank reports that about 54% of Zambia GDP is
attributed to the service industry. This includes tourism activities, banking
services schools etc. agriculture account for 2.58% of the 2019 GDP. Which is
small considering the sectors growth potential and the countless employment
opportunity that can be created. It is important to note that the government of
Zambia as targeted the agricultural sector as the chief industry of interest in
its various Diversification Programs. Industry or manufacturing accounts for
37% of the GDP. The copper produced and the washing powder we buy fall in this
category. It is important to understand which of these sectors have the highest
growth potential. This is important as it helps policy makers have a better
grasp on the allocation of resources.
As of 2018, the Zambian
economy was growing at 3.8% per annum. This is a drop compared to the 10.3%
growth recorded in 2010 which made it one of the fasted growing economies in
the world. The 2010 growth rate has been the highest official record since 1965
when the nation recorded an astounding 16.6% GDP growth rate. The country
growth has been locked in a downward spiral since 2010, this has been
characterized by increased unemployment rate, increased National Dept,
increased inflation among other. There is need for the country to implement economic
policies that will broaden the way of improving the economic sectors. By
adopting a multisectoral approach to development, the country can perhaps
retain its position as one of the worlds fastest growing economies.
Freepik (2020): Resources, <a
href="https://www.freepik.com/free-photos-vectors/background">Background
photo created by natanaelginting - www.freepik.com</a>
: accessed on 14/05/2020.
The Bank of Zambia(2020): https://www.boz.zm/statistics.htm
accessed on 13/05/2020
Trading Economics (2019):Zambia GDP, https://tradingeconomics.com/zambia/gdp-from-services:
accessed on 14/05/2020
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