Zambia expects high growth – high inflation

Zambia is expected to enjoy strong economic growth in 2012, with the authorities keeping inflation under control, according to John Wakeman-Linn, International Monetary Fund (IMF) mission chief for Zambia. “The Zambian economy has performed well so far in 2012. Real GDP growth is likely to be around 7.3%, which is particularly impressive in the current uncertain global economic environment. “Inflation is likely to slightly exceed the Bank of Zambia target of 7% for end-2012 as a result of food price rises, but remains well under control,” he said in a statement after leading a mission to Zambia in October. “Prospects again look good for Zambia’s economy in 2013. Barring further deterioration in the global economy, real GDP growth should be close to 8%. Under the current monetary policy stance, the mission projects that inflation will be 6%,” he added. The mission welcomed the fact that the budget deficit for 2012 was likely to be close to the targeted level of 4.1% of GDP. Revenue performance has been better than expected, a result of improved revenue administration. At present, the biggest risk for the Zambian economy is “uncertain prospects for the global economy”. “While the Zambian economy has fared well so far, further deterioration in global economic conditions could squeeze trade credit lines, reduce demand for Zambian exports, and lower copper prices,” warns Wakeman-Linn. CAPTION The new face of down-town Lusaka. Modern new buildings signal a growing economy.