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Zambia’s political stability to be marred by occasional unrest – Economist Intelligence Unit

Filed under: Breaking News,Business |
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The Outlook for 2012-16

Highlights

The president, Michael Sata, and his party, the Patriotic Front (PF), will remain in power in 2012-16. Political stability will be maintained, although it is likely to be marred by occasional social and labour unrest.

• The government is expected to strike a balance between redistributing wealth and sustaining investment and growth, although there is some risk that it will introduce policies that are poorly designed or counterproductive.

• The fiscal deficit is forecast to rise to 6.2% of GDP in 2012 as the government tries to meet its campaign pledge to put more money in people’s pockets, but to moderate from 2014 as spending is restrained to keep public debt in check.

• Real GDP growth is forecast to moderate to 5.9% in 2012 as poor rainfall damages the maize harvest, before picking up to an average of 6.9% in 2013-16, driven by robust growth in agriculture, mining and construction.

• The kwacha is forecast to depreciate to an average of ZK5,345:US$1 in 2012 owing to slower growth in copper prices and policy uncertainty, and more modestly thereafter, to ZK6,275:US$1 by 2016 as copper exports rise sharply.

• The current account is expected to return to deficit in 2012. It is forecast at an average of 2.9% of GDP in 2012-13 and is expected to narrow thereafter, going into a surplus of 0.6% of GDP in 2016, driven by trends in copper production.

Read the full report on Special Comment page

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