Namibia's economy to grow 4.2%Comment on this story
The global downturn could put the brakes on Namibia's economy, but analysts remain optimistic on the country's ability to shrug off external shocks given increased consumer spending and the government's loose fiscal policy.
Namibia, which relies heavily on mining and is a major uranium producer is expected to grow 4.2 percent this year, in-line with the central bank forecast of 4.2 percent and up from 3.8 percent growth last year, a Reuters poll showed on Thursday.
The poll of ten analysts estimates that the mineral-rich nation will expand 4.5 percent next year.
“Namibia's domestic economic activity remains resilient, as suggested by strong motor vehicle sales in Q1, rising private sector credit growth, and a sharp increase in building activities,” said Thea Fourie, economist at IHS Global Insight.
Foreign firms have been planning to exploit the southern African country for gold, lead, zinc and iron ore, though uncertainty about the global economy and sporadic demand from China could hamper commodity prices, knocking growth.
“Even as global headwinds take their toll on the export-dominated economy investment and government spending will help to pick up some of the slack over the medium term.” said Gregan Anderson, analyst at Business Monitor International.
Angola, just north of Namibia along the west coast of southern Africa, boasts growth prospects of 10 percent this year on strong oil revenues - dwarfing its neighbours other than Zambia, which sees 7 percent.
The Namibian government has undertaken a number of measures to help the economy and left the bank rate at a historical low of 6.0 percent for the last year and a half, after cutting it by 450 basis points to stimulate a struggling economy.
The government has also embarked on its Targeted Intervention Programme for Employment and Economic Growth (TIPEEG) as a fast-track dispensation for job-creation and stimulus for high economic growth in the long-term.
“A loose monetary policy combined with government's TIPEEG program should support the economy despite the vulnerable global environment, especially in the financially crisis stricken European Union (EU),” Fourie said.
Inflation is seen averaging 6.3 percent this year and easing to an average of 5.9 percent next year.
Consumer prices have been surprisingly moderating due to easing food and fuel prices, Namibia's inflation slowed to 6.0 percent in May from 6.4 percent previously while neighbouring South Africa braked to 5.7 percent from 6.1 percent in April.
The Namibian dollar is pegged to South Africa's rand and so shares the advantages and disadvantages of that volatile currency.
An advantage is that, according to analysts, the rand could turn the tide against a much stronger dollar in 12 months , which would benefit the inflation outlook for both countries, allowing the coastal nation to further focus on growth. - Reuters