Maravi

Sampa calls for wider export base

Sampa calls for wider export base
By Florence Bupe

Friday January 11, 2008 [03:00]

FINANCIAL Markets Association president Miles Sampa has said Zambia needs to increase its export base in order to cushion the economy against the impact of the expected weak dollar this year. And Sampa said the expected weak dollar will lead to higher international oil prices, thereby adversely affecting Zambia’s economic growth. In an interview, Sampa said the country needed to enhance trade with countries other than the United States where there were stronger currencies.

“There is already talk of an economic recession in the United States, and this means there will be reduced global productivity,” Sampa explained. “In the short term, this means the US will import less copper, which is our major export, and the effects will eventually trickle down to Zambia.”

Sampa observed that the country was likely to realise less revenue from exports as a result of a weaker dollar on the global scene.
“Once the dollar depreciates, it will mean the country will not be able to earn as much from its exports. In order to mitigate the impact of the weakening dollar on the country’s economy, there is need for the country to increase its export base and reduce reliance on importation,” he said.

Sampa advised that government needed to substitute imports with local products, as well as enhance trade within the region.
And Sampa projected that the weakening of the dollar would lead to further increases in the price of oil on the international market.
The international oil price is currently US $100 per barrel.

Zambia’s main import is oil, which is also essential. The main oil producing region is the Middle East, and if the dollar weakens, the impact on Third World countries will be negative,” he said.
Sampa said the development could also work against a stable inflation rate, as the country would be importing inflation.

The World Bank early this week projected that the dollar would weaken, leading to reduced export revenues and capital inflows for developing countries, and reduce the value of their dollar investments abroad.

The bank stated that the reserves and other cushions that developing countries have built up in the past years might have to absorb unexpected shocks.

Director of the World Bank Development Prospects Group and International Trade Department Uri Dadush warned that the economic growth of developing countries might be slowed down by the dollar trends.

Labels: ECONOMY, EXPORTS, MILES SAMPA

posted by MrK @ 6:36 AM