Notwithstanding the challenging global economic environment, Zambia’s GDP growth is projected to remain strong at above 6 percent [in 2013]. This is on account of favourable performance in the mining,construction, manufacturing and transport and communication sectors. However, with the decline in agricultural output, this projected outturn is lower than our budget forecast of above 7 percent. ALEXANDER CHIKWANDA (Budget Speech 2014) I think we can take this to mean that Government agrees that growth will be around 6 percent as the #IMF recently said. The “above” is just a way of saying it shouldnt be below 6.0%, but not far from 6.0% come December 2013. This is very telling. GDP in 2012 was 7.3% (Source: Economic Report 2012). So if these numbers are correct we have lost 1.3% off our growth. This is with all the heavy construction output and significant borrowing. What this means is that Chikwanda’s new 2014 target of 7% in the Budget is below the growth we had in 2012. But what the prospects of achieving this? The problem is that it seems we are observing weakening macroeconomic fundamentals i.e. growing fiscal deficit, unstable exchange rate and increased foreign borrowing. #Zambia is also extremely vulnerable to the Chinas slowdown and the on going decline in #copper prices. A recent Bloomberg report observed that the worldwide glut of copper supply is poised to almost triple in 2014, driving prices to the lowest in at least three years at a time when the International Monetary Fund says economic growth will be weaker than forecast. New mines or expansions to existing pits from Mongolia to Indonesia to Chile will boost output as producers respond to prices that more than tripled in the past decade. Shortages occurred in seven of the past 10 years as the Chinese economy expanded almost sixfold. Mining companies are finally catching up just as growth in China, the world’s second-largest economy and consumer of two in every five tons, is projected to be the lowest in almost a quarter century. The international and domestic factors therefore appear to combine to growth that may even be weaker than the paltry 6% in 2013. Most importantly it looks like we are now growing SLOWER than the sub-Saharan African average. Certainly we are likely to continue growing weaker than our comparator countries in the region Mozambique, Angola, Tanzania and Rwanda.
Posted on: Sat, 19 Oct 2013 12:27:45 +0000
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