Zambia seen growing at 7.2%

Zambia’s economic growth is expected to remain strong this year, with a predicted rally in China’s growth set to lend support to Africa’s top copper miner through increased demand for the metal, a Reuters poll found.

Ten analysts surveyed over the past week forecast the landlocked southern Africa nation’s gross domestic product to grow a robust 7.2 percent this year, only slightly weaker than the 7.3 percent estimate the government has given for 2012.

“Producer volumes are likely to rise despite the fact that copper prices have been lower,” said Yvette Babb, emerging markets analyst at Standard Bank.

Copper prices plunged some 30 percent in the last two years to around $6,900 per tonne and a separate poll last month suggested cash copper prices would average $7,900 a tonne in 2013, down 0.7 percent from the 2012 average.

But another Reuters poll suggested economic growth in China, Zambia’s main export destination, would pick up to 8.0 percent in 2013 after an unexpected slowdown in the first quarter, increasing demand for copper.

Expansion in the existing mining operations as well as the government’s public investment programme should also support growth, Babb said.

The government is developing infrastructure and plans to create thousands of jobs in its $6.3 billion budget for 2013.

Zambia’s central bank left its main lending rate steady at 9.25 percent last month, saying inflation was likely to moderate in May because of an improved maize harvest.

In January, the Bank of Zambia said it would increase the minimum reserve requirement that commercial banks must hold to keep a lid on lending, mop up liquidity and curb price rises.

Inflation slowed to 6.5 percent in April from 6.6 percent the previous month but is expected to rise next year to 7.0 percent and hold there through 2014.

“In Zambia, inflation has ticked up recently but plans to raise the minimum statutory reserve ratio should ensure that this falls back later in the year,” said Shilan Shah, at Capital Economics.