KALONDE NYATI, Washington DC
THE International Monetary Fund (IMF) says Zambia needs to quickly diversify its export base as falling commodity prices continue to take a toil on the economy.
IMF chief economist Maurice Obstfeld said with falling commodity prices seemingly to be long-lasting, economies need to diversify their export base to mitigate the impact.
Zambia’s economy, mainly driven by copper, has experienced shocks on the back of falling copper prices on the international market.
The price of copper on the London Metal Exchange on Friday declined by 0.7 percentage point trading at US$4,755 a tonne.
Mr Obstfeld said, at the World Economic Outlook press briefing on the side-lines of the IMF-World Bank annual meetings last week.
He said investments, favourable trade environment and investments in education and human capital remain key in ensuring that economies such as Zambia remain afloat amid challenges.
“Falling commodity prices are likely to be long-lasting and it calls for commodity exporting countries to diversify their export bases. It will require a welcoming international trade environment because the negative consequences for the push of trade restrictions would hold back emerging countries and lower developing countries that rely on exports to grow,” he said.
Mr Obstfeld observed that global growth has been too low for too long, and in many countries, its benefits have reached too few—with political repercussions that are likely to depress global growth further.
Global growth is projected to slow to 3.1 percent this year, with a recovery of 3.4 percent next year.
“These concerns highlight the risks to our projections, which remain tilted to the downside… Outside of the advanced economies, emerging Asia has done better, whereas sub-Saharan Africa as a whole has not, dragged down by its big commodity exporters despite a number of smaller countries benefiting from lower commodity prices,” he said.
He said renewed commitment to lowering trade barriers is, especially, important, in contrast to current trends while governments must recognise the need to develop labour-market resilience and lower barriers to entry in product and service markets, and to ease adjustment for those most vulnerable to the dislocations from technology, trade, and structural reforms.