On the 6 percent GDP growth rate in 2014

THE Zambian economy will either grow by 5.5 percent, 6 percent or 6.5 percent in 2014, depending on who you choose to believe. In his 2014 Budget Speech, the Hon. Minister of Finance set out to achieve a real GDP growth target of above 7 percent. During the course of the year, this was revised to 6.5 percent and was affirmed by the Bank of Zambia in the Governor's monetary policy statement in November 2014. The Governor said “Selected economic indicators tracked by BoZ continue to suggest that the real GDP growth target of 6.5% for 2014 is likely to be achieved … with the possibility of an even higher growth rate being achieved…”

However, in its latest economic brief released on 12th December 2014, the World Bank thinks that the Zambian economy will only grow by 6.0 percent. The Bank says the slowdown in economic growth is largely due to a reduction in copper output due to operational problems in some mines. The International Monetary Fund(IMF) has set a lower target of 5.5 percent. Said the IMF on December 18, 2014: “The Zambian economy continues to register strong growth. Non-mining growth has remained close to 7 percent, but technical outages at some mines led to a decline in copper production that is projected to reduce overall real GDP growth to about 5½ percent in 2014. The exchange rate depreciated sharply in the first half of the year. A marked tightening of monetary policy and a boost to international reserves from Eurobond proceeds helped to partially reverse the depreciation and stabilize the exchange rate…”

Since the country only produces annual estimates of GDP, the actual figures are not likely to be known until probably around mid-2015. Whatever the actual outcome, one thing is for sure: the Zambian economy continues to post strong economic growth. If it goes below 6 percent, that will be the first time since 2002. The one industry that has had poor growth since 2002 is the agriculture, forestry and fishing. It has posted declines in half of the last 14 years. In the lean years, the sector has declined by an average of 3.4 percent while in the bounty years it has grown by an average of 4.7 percent. The bulk of the Zambian workforce, which is largely informal, is in the agriculture sector. With limited growth in this sector, this is perhaps why the reduction of the persistently high levels of [especially] rural poverty has eluded us as a country.

The sectors sustaining the strong growth include construction, as well as transport and communications. Government's increased budget to the construction of roads and the planned construction of tourism, health and education infrastructure were among some of the projects that boosted the growth in the construction sector in 2014. The transport and communication activity is expected to increase due to increased output in the primary and secondary sectors. The railway sector has reportedly increased cargo haulage following Government's repossession of Zambia Railways. Equally, the road construction projects being implemented will increase the volume of traffic. The information and communication sector will continue to grow based on the increased investments in laying of fibre-optic networks and the construction of communication towers. The growth of these non-agriculture sectors is not enough to put a siginificant dent in the 60 percent headcount poverty rates.