August 31, 2015 / 8:40 AM / 4 years ago

Zambia forecasts lower growth, larger deficit as copper earnings shrink

A truck travels to a depth of 516 metres below the surface to collect ore at the Chibuluma copper mine in the Zambian copperbelt region, January 17, 2015. REUTERS/Rogan Ward

LUSAKA (Reuters) - Zambia expects slower economic growth and a bigger fiscal deficit this year as weak global demand for copper hits exports, documents released by the Ministry of Finance on Sunday show.

Global commodity prices have dropped sharply on concerns that China’s economy is slowing after years of rapid development that has sucked in metal imports.

“In the domestic economy, real GDP growth is projected at 5.0 percent in 2015 down from the projected target of 7.0 percent,” Treasury secretary Fredson Yamba said in a statement on the proposed 2016 to 2018 medium term expenditure framework.

Copper export earnings dropped 29.9 percent to $2.6 billion in the six months through June, compared to the first half of 2014, the ministry said.

Zambia, which aims for gross domestic product (GDP) growth of 6 percent, forecasts growth will return to its target in 2016, and rise to 6.5 percent in 2017 and 6.8 percent in 2018.

It sees its budget deficit exceeding its target of 4.6 percent of GDP this year, coming in at 5.5 percent in 2015 and 5.2 percent in 2016.

The finance minister asked parliament in June to almost double Zambia’s external borrowing limit to 60 billion kwacha ($7 billion) to finance its budget shortfall..

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