Macroeconomic indicators – Zambia poised to outperform African countries

President Barack Obama and First Lady Michelle Obama greet Ambassador of Zambia Sheila Z. Siwela in a receiving line during a Diplomatic Corps Reception for the foreign diplomatic corps in the Blue Room of the White House, Oct. 5, 2010. (Official White House Photo by Samantha Appleton)

Zambia is poised to outperform many African countries with real Gross Domestic Product which is forecast to grow to more than 7%.

Business Monitor International, one of Europe’s top notch business organization noted that Zambia was poised to grow its economy by 7.5% above most of the African countries, spurred by the country’s economic policies.

This is consistent with remarks by Minister of Finance and National Planning Situmbeko Musokotwane when he Budget that Zambia’s growth rate remains unshaken because of the broad economic fundamentals that have been put together by the Government.

According to reports, BMI’s forecast is on the back of sustained higher copper prices sustained foreign direct investment and a focus on long term infrastructure development with political stability as well as a rich endowment of natural resources.

The outlook for the Zambian economy is bright with relative political stability an improving business environment and a rich endowment of natural resources setting the country up to attract high levels of foreign direct investment. However, it states that the only single risk to the projection could arise with decreased demand for base metal.

Indeed, a fall in demand and a decrease in the price of the base metal is the largest single risk to our view that the Zambian economy will grow by 7.5% in 2010. The rise in foreign direct investment will set the platform for robust economic growth over the medium term, with real expansion forecast to average 7.3% over the coming decade. Much of the impetus for this growth will come from a deepening partnership with China which is expected to be a major foreign investor in the Zambian economy.

While the majority of this foreign direct investment has historically been targeted at the mining sector, BMI states that Chinese investment would increasingly focus the country’s economy. While the investment in non-mining activities bodes well for diversified economic growth in the medium to long term, we caution that, in the near term the Zambian economy remains reliant on the copper industry.

The average copper price forecast by BMI for 2010 at USD 6,800 per tonne has factored in a slowing Chinese property market and economy. However, a more dramatic slow down than we currently anticipate, or a fall in copper demand beyond our expectations, could render our growth forecast overly optimistic.

A risk to the longer-term outlook for the Zambian economy was that the country would fail to sustain the levels of foreign direct investment it is currently attracting but notes that the Government appears mindful of this risk and has committed itself to providing a business environment that will keep foreign companies and investors interested.

Efforts to ensure a flexible labour force, a low tax regime easy access to credit as well as to improve physical infrastructure mean that Zambia’s business environment rating of 37.9 out of 100 is likely to move higher over the coming years.

(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)

In the Photo: 

President Barack Obama and First Lady Michelle Obama greet Ambassador of Zambia Sheila Z. Siwela in a receiving line during a Diplomatic Corps Reception for the foreign diplomatic corps in the Blue Room of the White House, Oct. 5, 2010. (Official White House Photo by Samantha Appleton)

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