As at December 2009, preliminary data indicated that the countrys gross domestic product (DGP) was expected to grow by 6.3 percent. The latest figure for economic growth for the year was going to be known latest by February 2010. The countrys economic growth was on the upswing and on track to beat the targeted 6 percent growth rate for 2009.
The mining and construction sectors had strongly contributed to the growth rate of the Zambian economy in 2009. The high copper prices persisted over several months.
2009 opened off on a negative note during the height of the global financial crisis, the worst since the great depression. However, there was tremendous recovery of the Zambian economy in 2009 in the later part of the year mainly due to copper prices that had risen to levels that were not expected during the financial crisis.
The country opened with an inflation rate in January 2009 at a double digit of 16 percent and in December 2009, it closed at a single digit of 9.9 percent. Yes, as it can be seen in the expected 6.3 percentage growth rate, the rebounded economic growth in the year was in line with the drop in annual inflation.
The Zambian economy in 2009 for the first months of the year, was characterized by company closures and heavy job losses. The mining sector was the first to feel the effects of the global financial crisis. Luanshya Copper Mines and the countrys sole nickel mine, Munali were closed. In total about 12,000 jobs were believed to have been lost!
It is still a sad fact that in 2009 Zambia was still dependent on copper. The copper prices of US$6,500.00 per tonne at the end of the year were favorable to the economy as they were above the break even levels for the mines. This resulted into a positive result for the country.
However, at the time of this writing - 31st December 2009- despite the favorable prices, the country was going to have a decline from copper earnings of about 18 percent (give and take when prices are going to be firmed up in early 2010). The decline was as a result of the metal prices which collapsed to US $3,000.00 in the first quarter of 2009.
This was despite the fact that copper production had increased by 20 percent. For example as at October 2009, Zambias copper production was about 576,000 metric tonnes compared with 450,000 metric tonnes in the year 2008.
The other issue of why the country did not benefit much from copper revenues was the tendency for mining companies of keeping money abroad and only brought in very little for local obligations.
Due to the adverse effects of the recession, the country experienced a fall in tourism arrivals and hotel occupancy levels.
At the end of November 2009, Zambias gross international reserves rose to about $ 1.8 billion, which was equivalent to 5 months of import cover. This was the first attainment in 38 years. The reason for this was the receipt of $ 789 million additional funds from the International Monetary Fund (IMF).
Zambia recorded a surplus in major food crops such as maize. Output for the 2008/2009 season for maize was estimated at 1.8 million tonnes, well above 1.7 million tonnes of the national requirement!
In the financial sector, several more banks came into the market: First National Bank of South Africa, United Bank of Africa Zambia Limited, Eco Bank Limited, International commercial bank Zambia limited and Access Bank Zambia Limited. This brought the total number of banks in the country to 18.
Despite all this however, the sector suffered an increase in gross non-performing loans, from 7.2 percent at the beginning of the year to 12.9 percent at the end of the year.
Despite the challenges brought about by the global financial crisis, the industry posted a growth rate of 15.5 percent. Major projects by the mining industry had been put on hold.
However, more competition was still needed in the cement industry as prices among the three current players in the market, Zambezi Portland, Larfage and Oriental Quarries were still high.
In short, what do we expect next year? 2010 appears to be promising for the Zambian economy!
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