Private sector activity in Zambia tumbled in June as the global coronavirus pandemic hammered consumer demand and forced businesses to reduce their operations and staffing levels, although there were signs that the worst of the downturn may have passed. Output, new orders, and employment all continued to decrease sharply, but at softer rates than in May. Meanwhile, input costs fell again, enabling firms to lower their selling prices to help stimulate demand.
From May’s record low of 34.8, the headline Purchasing Managers Index (PMI), rose to 42.3 in June, which was the third-lowest in the survey’s history. Many surveyed businesses noted that worries surrounding the virus meant that customers canceled or reduced new orders, leading to a steep fall in total sales that was the third-lowest on record. Demand was harmed, with customer closures and restrictions on international travel leading to a substantial decline. Furthermore, the reading signaled a further marked deterioration in the health of the Zambian private sector, albeit one that was the softest in three months.
Zambia recorded 2283 Coronavirus Cases since the epidemic began, according to the World Health Organization (WHO), and has reported 82 coronavirus deaths. The annual inflation rate in Zambia eased for the first time in fifteen months to 15.9 percent in June of 2020 from 16.6 percent in May, as the kwacha recovered some ground during the month of June. On the other hand, prices slowed for food (16.3 percent vs 17.5 percent in May) while inflation remained steady for non-food products (at 15.5 percent). On a monthly basis, consumer prices were up 0.2 percent, following a 1.6 percent increase in the previous month.
Despite loosened restrictions by allowing restaurants, Casinos, Cinemas and Gymnasiums to operate normally subject to them following the public health measures such as sanitizing, social distancing and washing hands, business is still slow although some businesses are slowly picking up their pace, while others have taken advantage of the situation and have found ways to expand their businesses. ‘
Arguably, there will be a notable impact on economic output this year as supply chains globally are disrupted and negative demand shocks are felt, and the longer the duration, the more acute or severe the impact will be. However, looking ahead, Zambian businesses remain optimistic that growth will recover over the coming year supported by the mining, agriculture, and tourism sector, while a resumption in public spending will also add some much-needed stimulus.