Strong Economic Performance

Zambia’s economy rebounds in 2025, driven by mining, agriculture, and macroeconomic stability.

By Francis Maingaila ♥️ 

Lusaka, Zambia24 --- (December 2025) -- Zambia’s economy recorded a cautiously positive performance in the first three quarters of 2025, supported by strong mining output, recovering agriculture and improving macroeconomic stability, Zambia Institute for Policy Analysis and Research (ZIPAR) Executive Director Zali Chikuba said on Thursday.

Presenting ZIPAR’s Economic Performance and Outlook for Q1–Q3 2025 at a press briefing in Lusaka, Chikuba said the country is benefiting from a favourable combination of global and domestic conditions, despite persistent international uncertainty and internal fiscal pressures.

He said the global economy remained resilient during 2025 but continued to face risks from geopolitical tensions, trade disputes and regional conflicts, which have dampened global investment and productivity. Global growth is projected to slow slightly from 3.2 percent in 2025 to 3.1 percent in 2026.

Chikuba said Zambia is, however, positioned to benefit from easing supply chain constraints, lower oil prices and firm prices for critical minerals and agricultural commodities, noting that the country is a net importer of petroleum but an exporter of minerals and agricultural products.

On domestic performance, he said real GDP growth is projected to rise from 4.0 percent in 2024 to 5.2 percent in 2025, with further acceleration to 6.4 percent in 2026, reflecting recovery from the 2023/2024 drought and the impact of ongoing economic reforms.

Inflation has continued to trend downward, declining from 16.7 percent at the beginning of 2025 to 10.9 percent by November. 

Chikuba said inflation could fall into a single-digit range of between 6 and 8 percent by the first half of 2026, driven by improved maize supply and appreciation of the Kwacha.

He explained that while prices are still rising, the pace of increase has slowed significantly, providing relief to households and businesses.

The Kwacha strengthened markedly during 2025, supported by strong copper and cobalt export earnings, additional releases of IMF Special Drawing Rights and a weakening US dollar. 

As a result, gross international reserves rose to about US$5.2 billion by the end of the third quarter, equivalent to 5.2 months of import cover.

On fiscal performance, Chikuba said government revenue and grants were 4.5 percent below target by September 2025, with domestic revenue underperforming mainly due to weak VAT collections linked to subdued domestic trade activity. 

He added that foreign grants were also lower than expected following the withdrawal of USAID funding.

Despite the revenue shortfall, expenditure releases were kept below budgeted levels, which he said reflected fiscal prudence aimed at containing the deficit. 

He noted that social protection spending performed strongly, with the Social Cash Transfer programme exceeding targets due to additional support from cooperating partners, helping to cushion vulnerable households from the lingering effects of the drought.

Chikuba said the mining sector remained the backbone of economic recovery, with copper production increasing by 17.8 percent in the first half of 2025. Output from small-scale producers rose by 50.1 percent, reflecting improved compliance and a growing contribution by indigenous Zambians. 

He said Zambia is on track to exceed one million metric tonnes of copper production in 2025, with cobalt and gold output also recording growth.

The agriculture sector showed resilience, growing by 1.9 percent year-on-year in the second quarter, supported by a maize harvest of about 3.7 million metric tonnes. 

Chikuba cited the roll-out of the e-Voucher system as a key reform, saying it had reduced leakages and improved access to inputs, with agri-dealer participation in participating districts rising from 20 percent to 50 percent.

Tourism continued to expand, with international arrivals reaching 2.2 million in 2024 and strong growth extending into 2025, driven by policy reforms, improved global marketing and increased meetings, incentives, conferences and exhibitions.

 However, Chikuba warned that declining service standards at some facilities could undermine growth if regulation is not enforced, stressing that peace and stability remain Zambia’s greatest tourism assets.

He said transport and logistics remain critical enablers of growth, calling for a shift in mindset from being landlocked to being land-linked. 

While investments are underway in key corridors, including the Lusaka–Ndola road and TAZARA, Chikuba said the rehabilitation of Zambia Railways is urgent, noting that more than 90 percent of freight is still transported by road.

In the petroleum subsector, erratic diesel supply remained a challenge during 2025, although reforms such as the TAZAMA Open Access policy, implemented in April, are improving competition and transparency.

 Chikuba said diesel demand rose by 17 percent in 2025, reflecting increased economic activity, and called for sustained reforms to ensure stable supply at competitive prices.

The ICT sector remained one of the strongest performers, contributing 2.3 percent to GDP in the second quarter of 2025, driven by growth in mobile subscriptions and internet services.

On social sectors, Chikuba said education recorded exceptional performance, with enrolment and funding for skills development, out-of-school children and higher education loans exceeding annual targets. 

He said investment in human capital is essential to addressing Zambia’s long-term productivity challenges.

Health sector performance was better than expected despite the withdrawal of US government funding, with strong spending on essential medicines and improved stock levels. 

However, Chikuba raised concerns about persistent staffing shortages and procurement challenges, warning that transparency failures could undermine service delivery.

Water, sanitation and hygiene was identified as the weakest-performing sector, with low budget allocation and extremely poor execution. 

Chikuba said chronic underfunding was contributing directly to recurring cholera outbreaks and called for reforms to treat WASH as an economic sector capable of attracting private investment, alongside targeted subsidies for vulnerable households.

Looking ahead, Chikuba described 2026 as a pivotal year marked by general elections and the expiry of the Eighth National Development Plan. 

He warned of risks from election-related spending pressures and reform fatigue but said the period also presents an opportunity to design a fiscally realistic and climate-resilient Ninth National Development Plan anchored on productivity and human capital investment.

“The sacrifices being made are beginning to yield dividends,” Chikuba said. “What is required now is policy consistency, effective communication and a long-term perspective to secure sustainable growth.”