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Zambia won’t attain year-end economic targets – experts

Zambia won’t attain year-end economic targets – experts
Written by Kabanda Chulu

SOME economic experts have ascertained that Zambia is unlikely to attain the year-end economic targets of five per cent for GDP and 10 per cent inflation rate due to various factors that outweigh the attainment of the set goals.

But finance minister Situmbeko Musokotwane has expressed optimism that the country is on course to meet the economic targets as outlined in the 2009 budget especially with the positive harvest of food crops recorded this season.

And Dr Musokotwane has said the possibilities of having a negative impact due to a recession in the South African economy would be minimal since the imports into Zambia from that countryís affected sectors were insignificant.

Commenting on the performance of the Zambian economy during the first quarter of this year, University of Zambia (UNZA) Economics Professor Venkatesh Seshamani said the economic targets for 2009 were modest and achievable.

"But in all probability, even these targets are not likely to be met, Firstly, inflation may end up around 12 per cent mainly because of the kwacha depreciation and growth rate for the year could be four per cent or even below," he said.

On the impact of the South African economic recession, Prof Seshamani said the recession could have some impact, although insignificant.

“Zambia’s growth is mainly dependant on what happens in the mining sector, especially copper and this is currently dominated by the Chinese and Indian investments,” said Prof Seshamani. "Although these (China and India) economies too have been on the decline, their growth rates are still relatively robust and will probably end the year above six per cent by current global standards."

And Zambia Institute for Public Policy Analysis (ZIPPA) executive secretary Murray Sanderson expressed pessimism if the country would manage to reduce inflation to the targeted 10 per cent or to maintain gross domestic product (GDP) at five per cent.

“If inflation for the first five months of the year is running at an annual rate of 14.7 per cent then to bring it down to 10 per cent will require a six per cent rate over the next seven months and a reduction to even 12 per cent for the year will now be a big achievement especially as government revenue is likely be down, which will create a strong temptation to make up some of the shortfall by ‘printing’ money,” Sanderson said. ìI shall be very surprised if in 2009 we can manage to reduce inflation to the set target of 10 per cent, as for GDP, the general collapse of mining revenues makes it most unlikely that last yearís five per cent growth will be maintained. If, in the circumstances, we can avoid a reduction, then that will be an achievement.”

He further expressed doubt if the recession in South Africa would impact seriously on Zambiaís economy.

“Our exports to South Africa are not that great,” said Sanderson

But Dr Musokotwane said the major contributor to GDP and the attainment of favourable inflation rate was food, which the country had in abundance following a positive harvest.

“We have not done the exercise to review the projected targets but we are quite optimistic especially that food is the major contributor to GDP as well cushioning the inflationary pressures so at this rate, we are within reach of the targets and I am optimistic that the targets are tenable,” he said.

On the recession in South Africa, Dr Musokotwane said the possibilities of the situation having a negative impact on Zambia were there but would not be significant.

“We have to look at the numbers much more closely from my understanding the most affected sectors include mining, motor car industry, I probably will not think that there are mining imports outside Zambia that will be significant,” said Dr Musokotwane. “Given the size of the South African economy and the level of our exports there, we may be affected negatively.”

Labels: GREAT DEPRESSION II, SITUMBEKO MUSOKOTWANE

posted by MrK @ 2:40 PM