Local Economy Looking Up

0
12

By Staff Reporter WINDHOEK Namibia’s economic growth is expected to see an improvement this year thanks to the favourable prospects in the agricultural and mining sectors. The mining sector has seen new production especially at Elizabeth Bay diamond mine, which together with strong prices of uranium, copper and zinc is anticipated to contribute positively to the mining sector. In a presentation yesterday, Old Mutual Namibia (OMN) said the Langer Heinrich uranium mine, whose production should come on board later this year would also improve the situation. On top of this prices for the strategic mineral – uranium – have shot up in months to around US$40 per pound. During the third quarter of 2005, the mining and quarrying sector recorded a negative growth of 20.7 percent unlike the 15.1 percent growth it recorded in the fourth quarter. The developments in the sector showed recovery especially in some minerals, namely diamonds, uranium, gold, zinc and marble, whose demand has been strong on the international market, China being specific. According to the Bank of Namibia quarterly bulletin, the turnaround in diamond production in the fourth quarter made a significant contribution to the mining and quarrying sectors. Diamond production increased by 7.7 percent, unlike the negative growth of 30.8 percent it recorded in the preceding quarter. OMN believes that with the good rains that Namibia received this year, the performance of the agricultural sector should also see an improvement. However, the fishing sector experienced setbacks due to lower quotas, as well as seasonal closures. The resultant effect of lower fish prices, a strong currency and rising energy costs, is likely to be felt in the manufacturing sector which relies on fish products for exports. As if this was not enough, the strong currency and increased competition are also likely to provide further inertia to the manufacturing sector. Although inflation is rising because of increasing transport costs and food prices, OMN said inflation should remain suppressed. The presentation touched on the performance of the global economy, which remains robust and broad based in 2006 and also on emerging markets, which have experienced a material sell-off in recent weeks. Some of the emerging markets are neighbouring South Africa, China, Brazil, Russia and Argentina, where some investors have pulled out and invested in the USA, where markets are less volatile. “The pullback in these markets raised concerns of a repeat of the 1998 emerging markets contagion,” said the presentation made by Alwyn van der Merwe, a Senior Portfolio Manager from South Africa. However, the meltdown of these markets is unlikely because their fiscal positions have improved. South Africa for instance would be able to defend its currency better now than in 1998 because its foreign currency reserves are now quite high.