Zambia’s economic outlook downgraded to negative due to chaos in economic policy

An International economic ratings organisations has downgraded Zambia’ economic outlook to negative.

Fitch Ratings www.fitchratings.com lowered its outlook on Zambia to negative from stable, citing concerns over the direction of the African nation’s economic policy.

Among those concerns, the ratings firm said planned overhauls of the mining and banking sectors raise the risk for unintended effects on investment in the country.

Fitch also pointed to developments like the government’s recent decision to reverse the privatization of state telecommunications company Zamtel, as cause for concern.

A rapid increase in copper prices in recent years has been a boon for the Zambian economy, which has averaged 6.8% growth during the past five years, Fitch said. The firm noted prospects for growth beyond this year are less certain, however, as growth in mining production could be constrained by weaker growth in China, Zambia’s main export destination.

The ratings firm Thursday affirmed Zambia’s long-term foreign currency rating at B-plus, leaving it four notches below investment-grade status. A weaker investment environment with negative implications for economic growth would likely result in a downgrade of the rating, Fitch said.

B plus rating means the country is seriously  prone to changes in the economy.

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