Economy Expected to Grow


By Wezi Tjaronda WINDHOEK Namibia’s economic growth this year is expected to pick up slightly to close to four percent after it saw a decline last year. At the end of 2005, the economy slowed down to around three percent, compared to the 5,9 percent growth of 2004. The economy will owe its growth to widespread rainfall and favourable prospects for the agriculture sector, additional mining activities and the new mine at the coast. Johannes !Gawaxab, Chief Executive Officer of Old Mutual Namibia, told stakeholders at a breakfast meeting yesterday that mining activities, coupled with strong commodity prices, should provide the necessary impetus for economic growth. !Gawaxab noted that the commodity prices of zinc, uranium, copper and gold were on the uptrend which would support macro-economic growth – news that remains good for companies involved in these commodities. The global environment, which has generally seen growth, appears to be friendly to Namibia and South Africa, with the Namibia dollar being pegged to the South African rand. !Gawaxab noted that solid interest in commodity markets by investors as well as firm trends, specifically from China and India, continue to lend support to commodity prices which bodes well for the Namibian and South African mining sectors. China ad India are new emerging markets, where the economy ended on a strong footing at the end of 2005, compared to the developed world. However, the manufacturing sector may continue to register a decline due to a strong currency and increased competition, which are expected to impede prospects for the sector. “The resultant effect is likely to be felt in the manufacturing sector which relies largely on exports,” he said. “Apart from this, the country’s manufacturing sector may also be impeded by the rising costs of oil, which is very volatile and is expected to be high for longer periods than expected. The Old Mutual Namibia CEO said the problems in the fishing sector have not abated because of low quotas, a strong currency as well as rising energy costs. This week, the Minister of Fisheries and Marine Resources unleashed new measures aimed at increasing fish stocks in Namibian waters. Among others, for the next five years there will be no new fishing rights allocated, the total allowable catch for hake will be reduced while closed areas for hake will also be introduced. Inflation, which has been rising mainly due to increasing transport and food prices, is however expected to remain relatively suppressed. The recent tax relief unveiled in the South African budget is expected to sustain robust consumer spending. At the moment, consumers are driving the South African economy, a situation that may spill over to Namibia, considering that Namibia is a commodity-based eco-nomy.