Our expectation of growth printing around 4.5% is in line with most forecasts — most notably the Bank of Namibia (BoN) expectation of 4.4%, says Head of Research at FNB Namibia, Daniel Motinga.
Motinga was reacting to a recent research study on global markets for sub-saharan Africa.
He says however, there is too little information from the supply side to substantially alter Namibia's growth outlook.
He says data from local uranium mines shows that production was up 17% year on year (y/y) in 1Q13, although it was down 13% over the previous quarter.
“We do not see risk of a significant slowdown in overall mining production for the moment. We are worried about the medium-term impact of the drought on agriculture’s performance for 2013. Government has declared a state of emergency because of the drought, which is welcome. But the impact could be minimal given that the sector only accounts for 4.1% of GDP. Mining is much more important at 11.5% of GDP and an adverse shock to this sector would have a much greater impact on growth, ” he says.
Regarding inflation Motinga says it printed 6.1% y/y in April from 6.3% in March.
He advised that most of the pricing pressure is coming from the services component, accelerating by 9.7% y/y compared to goods inflation of 4%, which is a trend we have observed since May 2012.
However, overall inflation is decelerating on a monthly basis from 0.4% in March to 0.2% m/m in April. This is positive it means the rate which general prices are increasing is slowing which positive for the average consumer’s purchasing power.
On the topic of food inflation he says that it continues to remain at relatively subdued levels at 6.8% y/y — same as in March. “We expect food inflation to accelerate to around 7.3% in May before it peaks around 8.5% in June. Despite our expectations of a short-term acceleration, we think food inflation will average 6.8% this year compared to 8.8% in 2012.”
In the report Motinga states that the BoN believes that inflation is currently at tolerable levels and that monetary policy should continue to support growth. He added:
“We interpret that the current policy of low interest rates will prevail for this year. Of course, the monetary policy narrative in Namibia is not immune from the policy dynamics in the anchor economy, which means the BoN’s hands are probably tied in so far as changing rates in relation to developments in the domestic macro environment.”
Namibia’s growth outlook is generally in line with trend growth given the challenges in key export markets. Angola has a GDP of 8% and inflation of 9%, Botswana 5% and 7%, Mozambique 7,5% and 7% and South Africa has a GDP of 2,4% and inflation of 5,6%.