Zambia Economic Update : Electricity - Turning Crisis into a Catalyst for Growth, Jobs, and Development

Overview & Synopsis

Zambia’s economy has demonstrated resilience despite external shocks, supported by reforms that strengthened macroeconomic stability, fiscal discipline, and debt management. Real GDP growth remained steady at 3.8 percent in 2025, driven by a strong agricultural recovery and contributions from mining, manufacturing, and construction. However, persistent challenges, particularly widespread electricity shortages and climate-related shocks continue to constrain economic diversification, services growth, and job creation. While monetary and fiscal performance improved, with declining inflation, exchange rate appreciation, and a fiscal surplus, Zambia remains at high risk of debt distress, limiting access to external financing. The medium-term growth outlook is positive, with GDP projected to average 4.7 percent during 2026–2028, but is subject to downside risks from global uncertainty, commodity price volatility, and climate change. Sustaining reform gains will require accelerated structural transformation, increased private sector participation, and continued fiscal prudence. Reliable, affordable electricity emerges as a critical enabler of growth, employment, and social development, particularly given its central role in key sectors such as mining, agriculture, and manufacturing. The report highlights the urgency of power sector reforms, including diversification of energy sources, improved financial viability of the utility sector, and increased investment, to support long-term economic transformation and inclusive development.