After strong headwinds in 2015 and 2016, economic conditions were favourable in 2017. Preliminary estimates indicate that real Gross Domestic Product growth was 4.1 percent in 2017 from 3.8 percent in 2016, driven by the agriculture, tourism, manufacturing and energy sectors. Other sectors such as mining and construction also recorded positive growth but at a slower rate.
Fiscal performance, although remaining a challenge, shows that the fiscal consolidation effort, which has been the cornerstone of the economic programme over the past few years, is slowly gaining traction. The budget deficit was recorded at 6.1 percent, and contained within the budget target of 7 percent of GDP. As with growth, however, more has to be done to enhance domestic resource mobilization, given the infrastructure deficit and the need to enhance service provision for our people. It is with this in mind that a number of reforms were undertaken in public financial management, revenue mobilization and in the agriculture and energy sectors. This is with a view to enhance controls and reduce wastage and leakages.
During the review period, there was a reduction at the rate prices increased year on year to 6.1 percent at end December 2017, compared to 7.5 percent in December 2016. The inflation rate was, therefore, contained within the medium term target of 6-8 percent, on account of supply of sufficient food items, and relative stability of the exchange rate. In the foreign exchange market, the Kwacha remained stable, depreciating by only 0.97 percent against the US dollar on a year-to date basis closing the year at K9.9928/$ from K9.8973/$ in 2016. Slight depreciation was also recorded for other major currencies such as the Euro. This was on account of relatively stable supply of foreign currency on the market.
In the external sector, merchandise export earnings rose by 23.4 percent to US $8,036.4 million from US $6,513.5 million in 2016. Copper exports earnings increased by 34.4 percent to US $5,910.8 million from US $4,399.1 million in 2016, on account of higher export volumes and average realised prices. Non-traditional export earnings (NTEs) increased to US$1,780.1 million from US$1,748.9 million in 2016. The import bill increased by 15.2 percent to US$7,531.6 million from US$6, 538.5million, on account of relative stability of the exchange rate.
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