First National Bank Zambia Economic Update – April 2022
First National Bank Zambia Economic Update – April 2022
LUSAKA, Zambia – 26 April 2022 – Following a significant rebound estimated at 3.6% in 2021, Zambia’s economy remains on a path of recovery. Rand Merchant Bank (RMB), the corporate and investment banking arm of FirstRand Bank Limited – of which FNB Zambia is also a division, is expecting the economy to grow to 4.8% in 2022 before stabilizing at 4.0% in 2023.
“We note that in 2022 growth in the secondary industry is likely to maintain its momentum, specifically electricity, manufacturing and construction, given ongoing projects in these areas,” says Daniel Kavishe, RMB Africa Economist.
Daniel Kavishe, RMB Africa Economist
Inflation for March continued on its disinflationary path as it eased to 13.1% from the 14.2% recorded in February.
The moderation can be attributed to a slower pace of price growth for both the food and non-food segments which reduced from 16% to 15.3% and 11.8% to 10.3%, respectively.
“The continued easing in CPI inflation is largely in line with our expectation for inflation in 1H22, particularly given the elevated price levels in 1H21.
For context, the inflation print for March 2021 (reference point for inflation in March 2022) was recorded at 22.8% which is one of the highest levels in the recent past,”
The Energy Regulation Board (ERB) announced a c.22% average increase in fuel pump prices across the product spectrum effective 1 April 2022. The adjustment represents a year-on-year average increase of c.50% in pump prices, which is largely reflective of the changes in the international oil price as well as currency movements over the review period.
“Given the developments in the energy sector as well as the expectation that base effects will likely dissipate in 2H22, our view for a possible 100bp rate hike through the course of this year remains firm,” says Kavishe.
After opening the year at levels around 16.80, the kwacha had weakened against the USD in Q1-22, averaging a rate of 17.75. “Demand and supply dynamics have remained largely unchanged, with demand for foreign currency continuing to outstrip supply,” says FNB Zambia Corporate Dealer Chileshe Moono.
As expected, the central bank’s participation in the market has been key in supporting the currency and managing the liquidity mismatch. Further, offshore participation though sporadic, has also provided support for the kwacha. Offshore participation is often around month-end in preparation for the bond auctions. “Overall, our assumptions for currency movements to be anchored by central bank participation and developments around the finalization of an IMF programme remain largely unchanged.
“Subsequently, our forecast holds firms for USD/ZMW to come in at 17.75 at the end of 2022,” says Moono.
-ENDS-
For more information and/or interviews, contact:
Karen Gombo Adams
Brand & Communications Manager
FNB Zambia
Mobile: +260 972 455 622
Email: Karen.Adams@fnbzambia.co.zm
Karen Gombo Adams
Brand & Communications Manager
FNB Zambia
About FNB Zambia:
First National Bank (FNB) Zambia Ltd is a wholly-owned subsidiary of First Rand Group South Africa and started operating in Zambia on 1st April 2009. The FirstRand Group has a presence in eight African countries outside South Africa, offering full banking services through FNB and Rand Merchant Bank (RMB).
FNB Zambia Limited is authorized and regulated by the Central Bank of Zambia and is an active member of the Bankers Association of Zambia.
The team services retail customers, local and multinational corporate clients and offers a comprehensive suite of Corporate and Investment Banking products and services.
The bank has a network of 23 branches, approximately 160 ATMs, over 3,000 Point of Sale devices, and over 1500 Cashplus agencies.
For more information, visit www.fnbzambia.co.zm
