Country Report Namibia April 2009

Outlook for 2009-10

• Hifikepunye Pohamba, will stand as SWAPO's candidate at the elections in November 2009. He is certain to win re-election as president, although in the parliamentary election SWAPO's majority may be reduced.
• Real GDP growth will decline to 0.8% in 2009, mainly because of lower mineral production resulting from low global demand. In 2010, with an upturn in demand, higher diamond and uranium output will result in GDP growth of 3%.
• With the fall in world food and oil prices, average inflation is forecast to decline from 10.3% in 2008 to 7% in 2009 and 5.5% in 2010.
• The current-account surplus will widen to 3.2% of GDP in 2009, owing to a narrowing of the trade deficit resulting from lower import prices and weaker import demand and despite a fall in customs revenue.
• The current-account surplus will narrow to 2.8% of GDP in 2009, as a deterioration in the invisibles balance offsets a slight narrowing of the trade deficit.

Monthly review

• Plans to devolve power to Namibia's 13 regional authorities are making slow progress; only limited funds are allocated to the process in the new budget.
• In the budget for fiscal year 2009/10 (April-March), presented to parliament on March 19th, the government has opted for a sizeable increase in spending in an attempt to stimulate the economy.
• A budget deficit equivalent to 5.2% of GDP is projected for 2009/10, to be financed by increased borrowingthe ceiling on government debt has been raised from 25% of GDP to 30% of GDPand by drawing on reserves.
• Revised figures for 2008/09 put the deficit at 0.7% of GDP, compared with the original budget projection of 2.7% of GDP, as revenue was 5% above budget.
• Reductions in personal tax will mainly benefit lower-income Namibians; corporate tax for non-mining companies has been reduced from 35% to 34%
• The government's medium-term expenditure framework projects deficits of 7.1% of GDP in 2010/11 and 4.6% of GDP in 2011/12, and forecasts that public-sector debt will increase to 29.3% of GDP by March 2012.
• Namdeb Diamond Corporation will cut output this year by suspending production at its onshore mines for three months. Namdeb's total output will decline by more than 30% year on year to around 1.4m carats in 2009.
• The government forecasts average real GDP growth in 2009-12 at 2.2%; the growth forecast for 2008-11 at the time of last year's budget was 5.2%.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52