Risk assessment – fall of copper price

The economy remained strong in 2008, driven by the copper refining sector, energy infrastructure investment (hydroelectricity) and tourism. GDP growth suffered nonetheless from a drop in farm production and the collapse of copper prices in the second half of 2008, a trend likely to continue in 2009 and affect both export earnings and inflows of foreign direct investment in copper and cobalt mines. Inflation peaked in 2008, stoked by soaring prices for petrol and foodstuffs. The Zambian kwacha depreciation – affected by the fall of both portfolio and foreign-direct investment – will likely limit any easing of the consumer price index in 2009.