Stanbic Bank sees 7.3% GDP growth in 2012
The Standard Bank Group says Zambia is poised to continue recording strong economic growth with GDP projected to hit 7.3% this year.
Standard Bank Group which trades in Zambia as Stanbic Bank says the Zambian continues to benefit from investment in public infrastructure at road and rail as well as selected power projects.
Standard Bank Group Africa Strategist Yvette Babb said the local economy is expected to accelerate further to 8% in 2014 if the levels of investment and the external sector remain unchanged.
Ms. Babb was speaking in Lusaka this morning during a media breakfast when she made a presentation on the Zambian economic forecast.
“What we see in the short to medium term is a strong GDP growth rate for Zambia, buoyed mainly by increased public infrastructure investments and a favourable copper price. We think Zambia will by 2014 hit the 1 million mark with regard to copper export as key copper projects come on stream,” Ms. Babb said.
She however warned that some key risks from the external front such as a weakened consumer demand in China and the Eurozone.
“We are confident we will see GDP accelerate from 7.3% y/y in 2012, to close to 8.0% y/y in 2014.”
Ms. Babb also warned that Zambia faces a serious risk to budget deficit due to the growth in public sector wages.
“Growth in public sector wage bill will exert considerable pressure on expenditure. Basic wages will rise by 40-50% from Sep 2013 following a 15% adjustment last year. The shift to a single spine salary structure will furthermore be associated with additional once-off costs,” She said.
She added, “This is unlikely to be offset by the savings from the removal of the fuel subsidies or a rise in other revenues.”
Ms. Babb also noted that the removal of fuel subsidies and the looming electricity hike will contribute to increased non-food inflation expectations.
She further observed that the Statutory Instrument 32 which will be effected in July 13 will see export revenues brought onshore but will have no immediate effect on demand for the Kwacha.