Zambia has stabilized its economy following its distinction as the first sovereign to default on debt obligations during the Covid-19 pandemic. The country negotiated restructuring deals with most creditors and secured a $1.7 billion funding program with the International Monetary Fund (IMF).

The Zambian economy is projected to grow by 5% in 2026, supported by investments in copper mining and a strong maize harvest. However, challenges remain, including high borrowing costs due to unresolved debt treatment with several private commercial lenders. Additionally, fuel price increases linked to the Iran war have complicated the central bank's efforts to control inflation, and a potential drought next year could reduce power generation.

Mutisunge Zulu, chief risk officer at ZANACO, highlighted the difficult policy choices awaiting Zambia's next administration to unlock job-creating growth. Zambia is preparing for a general vote scheduled for August 13, 2026.

In related regional developments, the Houthis, who control half of Yemen, have announced a blockade on oil exports by Saudi Arabia. With the Strait of Hormuz effectively closed, a shutdown of the Bab al-Mandeb strait could block 25% of the world’s oil and gas supply, exacerbating global energy market uncertainties.

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