Both the Life and Non-Life markets are recovering from a sharp decline caused by an economiccrunch, with the recent sustained fall in copper prices having provoked a rise in inflation, currencyweakness and slowing spending by households; all compounded by the government's poor management ofits finances. Those negative dynamics are now beginning to reverse, or at least partially unwind, thanks to apartial revival of the copper market. As a result, premium growth in real terms - and especially in USDterms - is seeing a strong rebound in 2017, which should be sustained through to 2021, according to ourcore scenario. However, another major copper price crash would be disastrous, potentially sparking afiscal crisis and intensification of the earlier vicious macroeconomic circle.
Latest Updates And Key Forecasts
Nominal premium growth in Zambia's Life market has been quite high in recent years in local currencyterms, but only due to high inflation; real growth has been much lower, and the size of the premium poolhas contracted in USD terms. Going forwards, a stabilisation of copper prices, new investment by miningfirms and fiscal consolidation should encourage a return to stronger economic growth, reduced inflationand a firmer exchange rate. As a result, while nominal growth in premiums in local currency terms willnot be as strong as previous year, in real terms it will be higher than over the period 2014-16, while indollar terms, there will be a return to robust positive premium growth.