/ 4 January 2010

Mining boom likely to spur Zambia’s growth

Zambia is likely to register economic growth exceeding 7% in 2010, spurred by a resurgence in mining and a boom in construction and agriculture, Bank of Zambia (BoZ) Governor Caleb Fundanga said on Monday.

The Central Statistical Office said in October the economy was expected to grow by 6,3% in 2009.

Fundanga said two new mines were expected to open in north-western Zambia and that Munali nickel mine, which closed at the height of the global financial crisis, would likely resume operations. Zambia is Africa’s largest copper producer.

He said rising international copper prices and large construction projects would support economic growth.

“All these factors suggest that there is going to be remarkable development and one should expect a growth of at least 7% or even above for this year,” Fundanga said.

Fundanga also said the country was likely to meet the 2010 target of braking inflation to 8%. Annual headline inflation slowed to single digits for the first time in 21 months in December.

“The fact that inflation was brought down to 9,9% in December is something worth celebrating and going forward we think that inflation should dip further to around 8%,” Fundanga said.

BoZ acting director of economics department, Mulenga Pamu said Zambia’s chances of meeting the inflation target would be boosted by rising international copper prices that should support the local currency.

“The increase in copper prices always leads to the appreciation of the kwacha and that will help to ease inflationary pressures. With these positive fundamentals, we expect to achieve the 8% targeted annual inflation rate for this year,” Pamu said. – Reuters