In general the performance of the economy in 2003 is expected to improve compared to 2002. Real GDP is expected to increase by 4.4 per cent in 2003 compared to a marginal increase of 1.8 per cent in 2002. While many sectors are expected to perform better in 2003 compared to 2002, large-scale agriculture industry is expected to decline due to low production in burley and sugar. Real GDP growth is expected to increase by 4.9 per cent in 2004.
The external sector is expected to improve slightly in 2003 as a result of reduced imports on account of maize to avert the spill over effects of hunger during the year. The trade deficit is expected to amount to K12.7 billion in 2003 from K14.0 billion recorded in 2002 and projected at MK10 billion in 2004. The current account balance is expected to register a deficit of K31.1 billion in 2003 compared to a deficit of K28.7 billion in 2002 and is expected to stagnate at similar levels in 2004.
On a good note, inflation is expected to slow down to an annual average rate of 10 per cent in 2003 compared to 14.8 per cent in 2002. The expected slow down in inflation is due to tight monetary policy and improved availability of food, which dampened pressure on food inflation. GDP deflator is expected to increase by 7.2 per cent in 2003 compared to an increase of 21.8 per cent recorded in 2002.
Imports prices are expected to increase by 18.0 per cent in 2003 compared to 6.9 per cent in 2002. In real terms, imports are expected to decrease by -1.9 per cent in 2003 compared to an increase of 25.4 per cent in 2002. The real increase in imports in 2002 was largely on account of high maize imports.
Despite export prices increasing by 26 per cent in 2003 compared to an increase of 4.5 per cent in 2002, exports are expected to increase only by 5.4 per cent 2003. However, this compares well to a decline of 3.0 per cent of volume of exports in 2002 mainly on account of exchange rate movements.