Macroeconomic Forecast Namibia

Our view of the main economic indicators is unchanged following a fresh review. Real GDP growth performance will remain acceptable, if hardly spectacular, mainly because the cost of imported oil is holding back expansion of the key sectors. For example fuel represents 20% of a commercial farmer's costs and is by far the greatest outlay for the fishing industry. As the fixed peg with the rand means that monetary policy is effectively set in Pretoria, the key to domestic inflation is fiscal policy. The outlook for the budgetary balance looks good, so we expect inflation to remain under control but the risks are firmly on the downside. The external accounts should also stay healthy, but the fact that the government is having to cut non-oil import costs to offset the higher oil bill is another factor dampening economic activity. Overall, overseas investor confidence in economic management remains high, as shown by the successful outcome to the country's first ever international syndicated loan in early August. The one-year facility raised USD50mn, was nearly 100% oversubscribed, and priced at a relatively favourable 22.5bp over LIBOR.

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