It is reported that higher crude oil prices, partly blamed on unrest in key oil producing regions, would cause some inflationary pressures in Zambia’s fledgling economy despite increased output in maize and copper in affected sectors.
Dr Caleb Fundanga governor of Lusaka based Bank of Zambia said that although the economic growth prospects look bright, the increasing crude oil prices, partly blamed on unrest in key oil producing regions would cause some inflationary pressures. He was optimistic that other more positive influences would help to lower inflation below the present 8.8 percent recorded in May. Zambia anticipates inflation to drop further to seven percent before the end of the fiscal year, 2011.
He said that obviously, there will be on the other side other pressures like oil we don’t know what direction oil prices are going to take. But we are going to have more positive influences more dominant which means we can expect lower levels of inflation. However, despite the concerns of increased cruse oil and other economic factors the Zambia’s Central Bank is optimistic that the 2011 elections, the 11th since independence in 1964 are expected to stimulate the local economy than hurting it.
Dr Fundanga noted that key political analysts fear that the run up to elections might lead to intermittent disturbances in both key economic fundamentals and general state of the economy as some risk averse international investors hold back their commitment to the local economy. But the performance of the economy which has seen government raise growth projections for this year to above 7% from budgeted 6.8% was expected to continue for the H2 of the year despite the forthcoming polls.
He added that Zambia had a good record of peaceful elections since independence enough strength to help retain investors’ confidence. Ordinarily, people will be campaigning and so forth but there is no reason why the elections should derail current strong economic growth.
Dr Fundanga said that the farmers are out there working in the field, the miners are out there. Whether there are elections or not, I expect the miners to be working. I don’t expect any disruptions. So, even in an election year we don’t expect to have problems. Those who are producing should continue producing, and on the voting day, they will go and vote. He said that elections tend to stimulate the economy as political parties tend to augment their expenditure on election related activities.
The central Bank envisions that with the expected surge in copper and maize production, the economic performance was likely to remain robust in the second half of the year, with grain output expected to stem inflation which continued to be fueled by the recent rise in food prices.
The country’s inflation was likely to slow to seven per cent by the end due to a bumper maize harvest causing softer food prices despite its current high levels of 8.9 for this month. The projections are looking upwards, we expect a higher rate of growth and more jobs being created and that is positive for the country.
(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)
