05 Feb 2018

This year’s national budget has raised legitimate hopes on the part of local and foreign investors for more returns as world economy continues to show renewed signs of resuscitation in various sectors.

Presenting the 2018 budget speech on February 5, Minister of Finance and Economic Development, Mr Kenneth Matambo said the recovery of the global economy continues to strengthen, mainly driven by accelerated growth in investment, trade and industrial production, as well as improvements in business and consumer confidence.

He noted that the improvement in global activity further reflects firmer demand for growth in advanced economies and large emerging economies, particularly United States and China.

In this regard, he said global output is projected to increase from 3.2 per cent in 2016 to reach 3.7 per cent in 2017 and 3.9 per cent in 2018, according to International Monetary Fund’s (IMF) World Economic Outlook report of January 2018.

The minister said growth in advanced economies is projected to increase from 1.7 per cent in 2016 to 2.3 per cent in 2017, and remain at 2.3 per cent in 2018, supported by accommodative financial conditions, strong business and consumer confidence in this group of economies.

In the meantime, he noted that the IMF also forecasts that the emerging market and developing economies will grow at a rate of 4.4 per cent in 2016 and 4.7 per cent in 2017, and reach 4.9 per cent in 2018.

He said this is attributable to the expected robust economic activities in China and other emerging European countries, especially Turkey and Poland, owing to supply side reforms such as expansionary policy mix.

In a more positive note, he asserted that sub-Saharan Africa economies will benefit from the recovery in the global economy, with growth forecast to increase from 1.4 per cent in 2016 to 2.7 in 2017, and further to reach 3.3 per cent in 2018.

This was underpinned by recovery in commodity prices, which resulted in increased oil production in Nigeria and Angola.

With regard to regional performance and outlook, the minister said the economic growth for the SADC region is expected to improve and reach 3.3 per cent in 2017, against 2.6 per cent recorded in 2016.

‘The improved regional activity is a reflection of rising global economic activity. However, this growth rate is still lower than the regional target of 7.0 per cent’, he said .

The downside risk to the expected improved economic growth of the region, he said is that inflationary pressures increased slightly from 10.3 per cent in 2016 to 10.8 per cent in 2017, against a regional target range of three to seven per cent, partly because of the stronger US dollar, compared to weaker regional currencies.

On a positive note, Minister Matambo however said the region’s terms of trade improved on account of the recovery in the global economy and higher production in the agricultural sector as a result of favourable weather conditions during 2016/17. ENDS