Maravi

(REUTERS) Zambia lifts 2009 growth forecast to 5 pct

Zambia lifts 2009 growth forecast to 5 pct
Thu Aug 20, 2009 2:35pm GMT

LUSAKA (Reuters) - Zambia has increased its growth forecast for 2009 to 5 percent on expected higher Chinese and Indian investments into the mining sector, Minister of Commerce, Trade and Industry Felix Mutati said on Thursday.

Mutati said efforts to diversify the Zambian economy and a recent rise in the price of copper -- the mainstay of the economy -- would also boost growth. Copper has gained nearly 40 percent since early July as funds have poured money into the industrial metals, betting the worst is over in the global recession and the latter part of the year will see better metals demand.

"We will probably be able to achieve 5 percent economic growth. The growth is likely to come from increased foreign direct investment, especially from China and India, into the mining sector," Mutati said in an interview with Reuters.

"Instead of taking their investment to Europe and the U.S, they are looking into investing in Africa ... the crisis confirms that Africa is not a major risk as an investment destination."

In June, Zambia had downgraded its growth forecast to 4.0 percent for 2009 from a previous 5.8 percent estimate, citing lower prices of copper.

Foreign lenders and investors have praised Zambia's government for conservative fiscal policies credited with fuelling an economic boom, with growth having averaged 5 percent a year since 2002.

The economy expanded by 5.8 percent last year and 6.3 percent in 2007. Many countries on the continent expect economic growth to slow sharply due to global economic downturn. However, some are starting to see signs of recovery.

Namibia said on Wednesday its mining sector had shown a big improvement in the second quarter, and, although still deep in recession, South Africa's rate of decline slowed in the second quarter.

"Mining will continue to account for the bulk of investment but we are still investing in agriculture and particularly manufacturing is coming up quite a lot," Mutati said.

Labels: ECONOMY, FELIX MUTATI

posted by MrK @ 5:36 PM