Economic growth slows on sluggish mining
Brian Benza | Friday October 7, 2016 16:20
On a year-on-year basis, growth was, however, stagnant as the economy grew at the same rate as the one recorded in the same quarter of 2015. “The slow growth in real GDP was attributed to real mining value added, which decreased by 13.8% in the second quarter of 2016 compared to a decline of 8.2% registered in the same quarter of the previous year.
In the quarter under review, copper and nickel and diamond production decreased by 26.6% and 12.1% respectively. It should also be noted that Mowana and Thakadu copper mines have been on provisional liquidation starting from the fourth quarter of 2015 to date,” SB stated.
However, the mining sector has shown an improvement in the first and second quarters of 2016 compared to the last two quarters of 2015 due to positive recovery in the global markets, particularly in major ones for diamonds.
Apart from mining, other sectors that recorded negative growth in the quarter were manufacturing and agriculture, which decreased by 0.2% and 2.5% respectively.
As has been in the past years, the economic growth in the quarter was anchored by the services sectors with trade, hotels and restaurants and transport and communications increasing by 7.3%, five percent and 13.8% respectively.
The water and electricity sectors also continue to record negative value added, with the decrease in the electricity real value added attributed to a decline in local electricity production by 20% and an increase of 24.6% in electricity imports.
“The decrease in local electricity production was largely driven by plant failure at the coal- operated Morupule B Power Station. At the end of the quarter under review, only two units were in operation at the power plant while the other two were undergoing remedial works,” SB said.
Government targets an economic growth rate of 3.5% this year up from a negative growth rate of -0.3% in 2015.
The 2016 projected growth rate is, however, lower than the estimates announced by finance minister, Kenneth Matambo in February when he projected the economy to grow by 4.2% in 2016 and 4.3% next year.
For 2017 government targets a growth rate of 4.1% up from a projected 3.5% this year with the outlook for 2017 underpinned by the expected improvement in the mining sector.
“This positive growth is underpinned by the expected improvement in the mining sector. The non-mining sector is also expected to contribute to the positive performance, with growth estimated at 4.6% in 2017,” read the recently released 2016-2017 Budget Strategy Paper.