Robust mining and farming, as well as an expected boost from strong government spending in last year's budget, should keep Namibia's economy growing at a modest pace in 2012, with a slight acceleration next year, a Reuters poll found.
The consensus, from a survey of 10 analysts taken over the last few weeks, forecast a 4.4 percent growth rate this year, matching the official estimate for last year's performance, and a rise to 5.0 percent in 2013.
But that is still well below the 6.6 percent pace of expansion in 2010.
“Growth will be underpinned by improving productivity in the mining and agriculture sectors, increases in both current and capital government expenditure and increased private investment,” said Gregan Anderson, analyst at Business Monitor International.
Anderson, who forecasts GDP growth at 4.6 percent this year, said the economy should perk up after widespread flooding and a sluggish world economy. But Namibia would be exposed, like many other African countries, to any renewed global downturn.
The resource-rich nation suffered a double-blow to growth in 2009 when floods destroyed infrastructure and crops. The global economic recession slowed booming demand for its commodities.
Neighbouring South Africa, the continent's largest economy, is expected to grow only 2.8 percent this year, hampered by a lacklustre recovery in the United States and Europe. But diamond-rich Botswana is expected to grow by 5.2 percent.
Namibia is one of the world's largest diamond producers and a major source of uranium. Foreign firms are also exploring the southern Africa country for gold, lead, zinc and iron ore.
NARROWING DEFICITS
The poll forecast the budget deficit will narrow to 4.9 percent of GDP in fiscal 2012/13, down from an 11.2 percent shortfall in the current year after rampant government spending designed to create jobs racked up a shortfall.
But that is less of an improvement than the drop to 4.4 percent of GDP finance minister Saara Kuugongelwa-Amadhila is expecting.
The Reuters poll found Namibia's public finances are expected to be roughly stable, however, with a projection for 5 percent of GDP deficit in the following 2013/14 fiscal year.
“Economists are happy that the finance minister has made a U-turn in the state's spending thirst seen in the past few financial years,” said Christie Viljoen at NKC Independent economists. “(This) suggests that the historical fiscal prudence of the Namibians will return.”
Inflation is seen averaging 6.8 percent this year, slowing to 6.2 percent next year. Consumer inflation rose to 7.4 percent in February from 6.6 percent in January, partly due to increasing food and non-alcoholic drink prices.
“We have factored in growth in the fuel price and its attendant impact on production costs,” said Rand Merchant Bank in a client note.
“We expect food inflation to average 9 percent this year compared to 5.1 percent the previous year. We think that given the oil price outlook, transport inflation will print on average around 6.5 percent.” - Reuters