Fuel hike won’t affect inflation, claims Fundanga

Bank of Zambia governor Caleb Fundanga has maintained that Zambia’s economy is likely to grow by 7 percent this year and 8 percent in 2011 due to a resurgence in copper exports, booming construction and manufacturing.

Dr Fundanga told Reuters that he is optimist that Zambia will grow by & percent this year saying if Zambia can achieve 7 percent GDP growth in 2010, he sees no reason why it can fail to achieve 8 percent in 2011.
Fundanga said this week’s 15 percent increase in fuel prices was unlikely to have an impact on a budgeted forecast of reducing inflation to 8 percent by year-end.
Inflation stood at 9.9 percent year-on-year in December, falling into single digits for the first time in 21 months.
Dr Fundanga said he did not believe a rebound in copper prices would lead to a stronger kwacha currency. Zambia is Africa’s largest producer of copper.
Earlier this week The Economic Association of Zambia (EAZ) said the 15 percent fuel increment will put pressure on the country’s economy.
Association President Mwilola Imakando said the increment will affect the cost of transportation of goods and services in the country.

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