Country Report Zambia May 2011

Outlook for 2011-12: Economic growth

Real GDP growth is expected to stay robust, at 7% in 2011 and 7.2% in 2012. Agriculture is forecast to grow by an average of 6% as producers of maize continue to receive subsidies and as the country's vast tracts of uncultivated arable land attract an influx of foreign direct investment (FDI). The sector has the potential to grow even more rapidly-productivity is low (maize yields are less than half the global average) and there is abundant fertile land and water-but this would require fresh thinking on agricultural policies, which is unlikely over the short term. Manufacturing will lack dynamism, although growth will pick up as fiscal incentives boost investment. Mining will continue to grow rapidly as buoyant copper prices keep investment high. Construction is forecast to grow by 15.8%, underpinned by investments in mining, public spending on infrastructure and the construction of houses. Services are forecast to grow by 5% as strong domestic demand sustains growth in telecoms and financial services. Standards of living are expected to rise, but not in proportion to GDP growth, as a substantial share of income from the largely foreign-owned mines is repatriated. This drives a wedge between GDP and gross national product, which is more closely related to household income.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
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