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Zambian growth seen at 7pct
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Thursday, 29 Nov 2012
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Reuters reported that government infrastructure spending should help Zambia's economy grow faster over the next 2 years providing copper prices do not fall.

Median forecasts from last week's survey of 13 economists show Africa's top copper producing economy expanding by 6.8% this year and 7.1% next year in line with the August poll then by 7.3% in 2014.

Growth slowed to 6.6% in 2011 from 7.6% in 2010. The government's USD 6.3 billion budget for 2013 announced on last month plans higher spending to fund infrastructure and create thousands of jobs.

Mr Shilan Shah Africa Economist at Capital Economics said that “The large scale infrastructure investment programs announced in the 2013 budget will support growth in Zambia in the coming years.”

The government also trimmed its forecast for gross domestic product growth over the next five years to above 7% from an earlier forecast of 8%. The landlocked southern Africa nation is one of the fastest growing economies on the continent and its government received bids of USD 11.9 billion for its debut USD 750 million Eurobond in September.

Zambia's long term growth prospects of roughly 7% per year and possibly more puts it in the same league as Nigeria and Angola. However, copper accounts for 30 percent of GDP and Q3 of total export receipts making Zambia vulnerable to falls in the price of the metal.

A Reuters survey last month forecast cash copper prices would average USD 8,020 per tonne in 2012 rising to USD 8,267 in 2013 which bodes well for Zambia. The benchmark contract on the London Metal Exchange was trading around USD 7,780 per tonne.

Consumer inflation is expected to average 6.6% this year, quickening to 7.0% before slowing to 6.8% in 2014. Inflation reached 6.8% YoY in October.

Mr Kunda Chikumbi of Zanaco, a state owned bank said that “Inflation remains in the single digit range, closing around 6.8 percent in 2012 with a light increase expected in the following years.”

The Bank of Zambia increased its benchmark interest rate by 25 basis points to 9.25% last month saying its monetary policy committee had noted upward risks to inflation. The central bank expects inflation of around 7 percent in 2013 as a bumper harvest helps to moderate food price pressures.

Source - Reuters

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