December drives high liquidity, runs low output dynamics
"Kwacha running on the back foot of US Dollar, as the market continues to face serious supply imbalances," says Kelvin CHISANGA (Left)
By Kelvin Chisanga
December in Zambia has evolved into an “entertainment month,” where consumer spending surges while production softens.
Households direct income toward celebrations, travel, hospitality and social events, fueled by year-end bonuses, 13th cheques, government payments and diaspora remittances.
Yet, this spike in demand is not matched by production. Agriculture remains in the planting phase, construction slows due to heavy rains and businesses operate below capacity as workers take industrial leave.
The result is high consumption amid limited output, creating short-term supply gaps that push up prices for food, transport, and services.
Increased import demand can also strain the exchange rate.
Much of the festive demand is absorbed by the informal economy, which adds limited value and weak productivity gains.
December’s dynamics highlight a structural challenge: Zambia’s economy continues to rely on consumption-driven growth rather than production-led expansion.
While festive spending boosts liquidity and business cash flow, it does not create sustainable economic growth.
The key policy challenge is to convert this seasonal consumption surge into post-festive investment, productivity and value creation, ensuring that high liquidity translates into meaningful economic development.
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