Namibia's economy to grow by 4.5%
International / 06 Nov '12, 5:29pm
Government spending aimed at boosting employment and growth will spur Namibia's economy next year, offsetting any drag from South Africa's struggling economy, a Reuters poll showed on Tuesday.
The median forecast from a poll of 12 economists showed Namibia's economy will grow 4.5 percent next year after an estimated 4.1 percent expansion in 2012.
That is much stronger than forecasts for the continent's biggest economy, South Africa, which is seen growing 3.0 percent next year.
Namibia's growth has remained fairly sluggish since the global financial crisis in 2008/09 hit exports, but economists see it in line with the central bank's forecast of 4.2 percent this year from 3.8 percent in 2011.
About 10 percent of Namibia's economy is based on mining and it is a major uranium producer.
“Growth is being supported by government spending, as it continues the implementation of the three-year Targeted Intervention Programme for Employment and Economic Growth (TIPEEG),” said Shilan Shah of Capital Economics.
The programme aims to fast-track job creation and stimulate longer-term economic growth.
“In spite of the positive developments, we continue to believe that growth risks remain largely skewed to the downside,” said Daniel Motinga from Rand Merchant Bank.
Neighbouring South Africa had also been banking on government infrastructure spending, but ratings agencies Moody's and S&P have downgraded its credit rating, leading to more caution on spending.
The economy of northern neighbour Angola is expected to post 7 percent growth in 2013, boosted by a continued rebound in oil production that has allowed the country to return to rapid expansion this year.
But Botswana will suffer the same fate as South Africa, almost halving its growth rate to 4.5 percent, next year, as the weaker global economy knocks demand for its diamonds.
Namibia's consumer inflation accelerated at its fastest pace in six months to 6.7 percent year-on-year in September from 5.8 percent in August on the back of higher food and fuel prices.
“This is the third highest annualised inflation figure recorded since February this year, suggesting that inflationary pressures, which we assumed would be evident in July, are only coming through now,” said Daniel Motinga.
Inflation is expected to average 6.5 percent this year, falling to 5.9 percent next year, according to the poll.
“Inflation risk has increased following the recent fall in the South African rand,” said Thea Fourie, economist at IHS Global Insight.
Namibia's dollar is pegged to the rand, which has fallen more than 7 percent since the start of the year, proving to have inflationary consequences for the west coastal nation.
Foreign exchange analysts have been calling for a stronger rand since April, but violent wildcat strikes in South Africa's mines have derailed the currency's efforts to strengthen. - Reuters