Country Report Namibia June 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 7.6% in 2009 and 5.3% in 2010.
• The current-account surplus will widen to 4.5% of GDP in 2009, owing to a narrowing of the trade deficit because of lower import prices and weaker import demand and despite a fall in customs revenue.
• The current-account surplus will narrow to 4.2% of GDP in 2010 as a deterioration in the invisibles balance offsets a slight narrowing of the trade deficit.

Monthly review

• The parties are gearing up for elections at the end of 2009, although tensions persist between the moderate and radical wings of SWAPO.
• The Bank of Namibia (BoN), the central bank, cut its repo rate on May 22nd by 50 basis points to 7.5%. This brought the repo rate down to its lowest level since July 2006 and came only just over a month after the previous cut.
• At the same time the BoN called on commercial banks to narrow the 475-basis-point differential between their prime lending rates and the repo rate, which they did by lowering their rates by 75-100 basis points.
• Rossing Uranium has agreed to pay a 6% royalty on uranium sales, double the standard 3% royalty. Rossing had refused to pay the 3% royalty when it was imposed in December 2006 until the mining act was amended to legalise it.
• Preliminary official data put real GDP growth in 2008 at 2.9%, compared with 5.9% in 2007; a contraction in manufacturing output of 2.6%, compared with growth of 8.4% in 2007, contributed to slower GDP growth in 2008.
• Year-on-year inflation fell to 10% in April, compared with 11.2% in March, largely owing to a substantial fall in food price inflation.
• A substantial increase in fish stocks has allowed the government to increase the total allowable catch for hake for the first time since 2004.
• Petrobras, the part-privatised Brazilian oil company, has bought a 50% interest in an offshore oil block that is said to contain a resource of 5.2bn barrels.
• Air Namibia has suspended direct flights between London and Windhoek in order to reduce its trading loss in the current financial year.

Source: Country Report

This report covers the following industry codes:
SIC Code: 10;60;70;49;20;47;37
NAICS Code: 212;52;72;22;11;311;48;336