IMF sees strong economic growth for Zambia in 2009

LUSAKA (Reuters) - The International Monetary Fund on Friday projected higher economic growth for Zambia in 2009 following the doubling of copper prices this year and improvements in other sectors.

In June, Zambia cut its growth forecast to 4.0 percent for 2009 from a previous 5.8 percent estimate, citing lower prices of copper, but raised it to 5.0 percent last month on expected higher investment in the mining sector.

The IMF said in a statement after a visit to Zambia that the improved outlook was already being reflected in the appreciation of Zambia's kwacha currency since May this year.

"The more-than-doubling of copper prices since the beginning of the year, along with some improvement in other sectors, will underpin somewhat higher GDP growth in 2009 than previously forecast (by the government)," it said, without giving a new prediction.

Zambia's balance of payments position should improve on the higher price for copper -- the country's main export -- and the stronger kwacha and bumper maize harvest of 1.9 million tonnes should help bring down inflation.

"The worst of the global economic recession appears to be over, although the pace and extent of the recovery is not yet well established," the statement said.

Zambia and the IMF agreed on a framework for the 2010 budget, which keeps a focus on increased spending on priority capital projects and social sectors.

The southern African country was hard hit by the collapse in copper prices in the second half of 2008, which put pressure on the mining sector, and led to job losses.