Zambian economy grows by 5,4%

LUSAKA – Zambia’s economy expanded by a revised 5,4 per cent in 2004 but is expected to slow this year as agricultural output declines after a regional drought, officials said yesterday.

In a policy framework for 2006-2008 Treasury Secretary Situmbeko Musokotwane said growth in gross domestic product (GDP) would amount to 5,1 per cent in 2005, lower than the six per cent projected in this year’s budget. But he said the government was aiming for a higher annual growth rate over the coming three years.”In line with the government’s broad objectives, (our) specific macroeconomic targets for the period 2006-2008 are to achieve real GDP growth rates of six per cent per year,” Musokotwane said in a statement received by Reuters.This also implied a downward revision from the government’s forecasts that growth would amount to between eight and 10 per cent in 2006, but Musokotwane gave no further details.Analysts said growth was likely to be constrained by poor performance in agriculture and recent fuel shortages, which forced the southern African country’s vast copper mines and some other industries to slash production.”Drought has caused low output in agriculture and shortages of fuel (in October) also forced industry to reduce production.This will impact on (economic) growth,” said Ignatius Chicha, Treasurer at Citibank in Lusaka.Musokotwane said that mining and construction would continue to spur growth in the coming three years, along with a pickup in agriculture and manufacturing.The government aimed to reduce inflation to 15 per cent in 2006 and five per cent in 2007, sustaining it at the same level the following year, he said.Its annual inflation target for 2005 was 17,2 per cent, but consumer prices rose by 18,3 per cent last month.Musokotwane said Zambia would be able to service its foreign debt after the International Monetary Fund approved broad debt relief for the country.Domestic borrowing would fall and foreign debt service would amount to 0.3 percent of GDP in 2006, 2007 and 2008, he said.Leaders of the Group of Eight nations in June granted Zambia US$3,95 billion in debt relief under the Highly Indebted Poor Countries initiative, a global plan to cancel debts owed by poor nations.”(The government) will reduce domestic borrowing to 1,6 per cent of GDP in 2006, 1.0 percent in 2007 and 0,5 per cent in 2008,” Musokotwane said.-Nampa-ReutersBut he said the government was aiming for a higher annual growth rate over the coming three years.”In line with the government’s broad objectives, (our) specific macroeconomic targets for the period 2006-2008 are to achieve real GDP growth rates of six per cent per year,” Musokotwane said in a statement received by Reuters.This also implied a downward revision from the government’s forecasts that growth would amount to between eight and 10 per cent in 2006, but Musokotwane gave no further details.Analysts said growth was likely to be constrained by poor performance in agriculture and recent fuel shortages, which forced the southern African country’s vast copper mines and some other industries to slash production.”Drought has caused low output in agriculture and shortages of fuel (in October) also forced industry to reduce production.This will impact on (economic) growth,” said Ignatius Chicha, Treasurer at Citibank in Lusaka.Musokotwane said that mining and construction would continue to spur growth in the coming three years, along with a pickup in agriculture and manufacturing.The government aimed to reduce inflation to 15 per cent in 2006 and five per cent in 2007, sustaining it at the same level the following year, he said.Its annual inflation target for 2005 was 17,2 per cent, but consumer prices rose by 18,3 per cent last month.Musokotwane said Zambia would be able to service its foreign debt after the International Monetary Fund approved broad debt relief for the country.Domestic borrowing would fall and foreign debt service would amount to 0.3 percent of GDP in 2006, 2007 and 2008, he said.Leaders of the Group of Eight nations in June granted Zambia US$3,95 billion in debt relief under the Highly Indebted Poor Countries initiative, a global plan to cancel debts owed by poor nations.”(The government) will reduce domestic borrowing to 1,6 per cent of GDP in 2006, 1.0 percent in 2007 and 0,5 per cent in 2008,” Musokotwane said.-Nampa-Reuters