Country Report Namibia February 2009

Outlook for 2009-10

• It is unclear whether the president, Hifikepunye Pohamba, will stand for a second term of office in November 2009, but whoever stands as candidate for the South West Africa People’s Organisation (SWAPO) is sure to win.
• Real GDP growth will decline to 1.8% in 2009, as a result of the world economic downturn. In 2010, with the upturn in global demand, higher diamond and uranium output will result in GDP growth of 3.7%.
• 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 5.6% in 2010.
• The current-account surplus will widen to 3.7% of GDP in 2009, compared with an estimated 0.5% of GDP in 2008, driven by a smaller trade deficit, as lower oil prices will lead to a decline in imports.
• In 2010 the trade deficit will widen as imports will grow faster than exports, owing to demand arising from the development of new uranium mines; as a result, the current-account surplus will narrow to 1.9% of GDP.

Monthly review

• Supporters of SWAPO have continued to harass supporters of the breakaway Rally for Democracy and Progress, and the threat of violence at the elections in November has increased.
• A 24% pay increase for the country’s 84,000 public-sector employees, announced in January, is expected to cost N$1bn over the next two years.
• Namdeb has not yet announced by how much it will reduce production in 2009 in response to the weak global diamond market.
• Uranium is one of the few sectors of the economy continuing to grow: the Rossing and Langer Heinrich mines are expanding their capacity, and new mines at Trekkopje and Valencia are expected to begin operating in 2009-10.
• Because of better ore grades, production at the Rossing mine rose by one-third to 4,000 tonnes in 2008, its highest annual output for almost two decades.
• Australia’s Extract Resources announced an initial resource estimate for Zone 1 of its Rossing South prospect in January and has said that further discoveries could make Rossing South one of the world’s ten biggest uranium deposits.
• Germany’s Schwenk Group has begun constructing Namibia’s first cement plant at Ohorongo. The group hopes to sell a 40% stake to local investors.
• Namibia’s foreign-exchange reserves fell by US$169m in November, probably owing to a decline in diamond exports as a result of the global economic downturn.

This report covers the following industry codes:
SIC Code: 60;10;15
NAICS Code: 52;212;23