ADVANCED MACROECONOMICS

The Zambian economy went through hard times in the first half of the year 2020 amid the Covid-19 fallout, particularly in second quarter. The pandemic's spread and subsequent containment measures have decimated demand; created supply bottlenecks; caused considerable job and income losses; and shut down businesses, some permanently, especially in the leisure and hospitality industry. This was worsened by rolling power blackouts, rising production costs and rising inflationary pressures, mainly due to pass through effects from a depreciating kwacha, further weighed on activity. The external sector was also adversely affected, with merchandise exports collapsing at a double-digit pace in the second quarter amid weak foreign demand. Turning to third quarter, business conditions continued to deteriorate markedlyhinting that subdued activity will persist. Required Imagine you are a permanent secretary at the Ministry of Finance in Zambia. Analyse the economic challenges Zambia is experiencing.