‘ECONOMIC REBOUND EXPECTED NEXT YEAR’

THE Zambian economy will next year show signs of recovery, triggered by monetary policy measures currently being implemented by Government, economist Mubanga Mpundu has said.

Professor Mpundu who is University of Lusaka lecturer in the school of business expressed optimism that the Zambian economy would next year rebound.

Prof Mpundu explained in an interview that measures such as the revision of the statutory reserve ratio (SRR) and monetary policy rate would help to improve growth prospects.

“While the economy has been under pressure as evidenced by poor performance of the Kwacha, high interest rates, tight liquidity and inflation, the economy will next year show signs of recovery, triggered by monetary policy measures being implemented,” he said.

The Bank of Zambia last week increased the SRR to nine percent from five percent on a daily basis to reduce inflation currently at 10.8 percent from the target of between six to eight percent.

Prof Mpundu explained that the increase in the SRR was necessary as it would reduce inflation levels to the required levels.

He said while the SRR was reducing money into the economy as the commercial banks would now have reduced liquidity for onward lending to the private sector, it would help boost economic growth in the long term.

“it has been shaky this year, prices of goods have gone up, people cannot borrow and cannot invest or save but in the next six months, based on the measures, we should have a more stable economy, hopefully,” he said.

Prof Mpundu also observed that Zambia’s continued reliance on mono exports had affected economic growth.

“We have heavily relied on mining and any external shocks affects the economy. We need to diversify the economy to cushion any shocks,” he said.

He also called for investments in projects that bring high returns.