Country Report Namibia

Outlook for 2008-09

• The president, Hifikepunye Pohamba, will almost certainly stand for re-election in 2009 and win a second five-year term of office.
• Economic growth will be supported by growth in mineral production, and in 2009 also by the stimulus created by the Kudu gas-to-power project. Real GDP growth of 4% is forecast for 2008, accelerating to 4.6% in 2009.
• Average inflation is forecast to rise to 9% in 2008, although inflationary pressures will begin to abate in the second half of the year. In 2009 average inflation is forecast to fall to 6% as food and oil price pressures ease.
• The rand (to which the Namibia dollar is fixed at parity) traded at an average of R7.61:US$1 in May. Further sharp depreciation is not expected; the exchange rate is forecast to average R7.90:US$1 in 2008 and R8.20:US$1 in 2009.
• The current-account surplus will narrow to 13.7% of GDP in 2008, owing to faster growth of imports and higher profit remittances, and to 12.6% of GDP in 2009, owing mainly to the further widening of the trade deficit.

Monthly review

• The Electoral Commission of Namibia has yet to set a date for the postponed election of the new local authority for Omuthiya in northern Namibia.
• When the election is held, it seems certain to be a fierce contest between the ruling party, the South West Africa People’s Organisation (SWAPO), and the newly founded Rally for Democracy and Progress (RDP).
• The government is considering a package of measures to lessen the impact on the living standards of low-income Namibians of sharp rises in the prices of food, fuel and other essential items since the start of 2008.
• The South African Reserve Bank is highly likely to raise its repo rate in June and the Bank of Namibia is expected to follow it by raising its base rate.
• Investment in Namibian companies is set to increase under revised domestic asset requirements for Namibian pension funds and insurance companies.
• Higher food and fuel prices pushed year-on-year inflation to 9.3% in April, its highest level since March 2003.
• The pilchard catch ceiling for 2008 is being held at 15,000 tonnes.
• A large potential oil reservoir, possibly containing 10bn barrels of oil, has been discovered in Namibian waters; the government may revive a scheme for a local oil refinery.
• Namibia’s foreign-exchange reserves are at a record level, standing at US$1.13bn in February—82% higher than a year previously.

SOURCE: Country Report