Economic growth in Namibia is expected to slow down b y 0.7 per cent in 2009 following the decline in exports, but this will rebound t o a 1.8 per cent growth in 2010 as green shoots of recovery on the global market s pur demand for commodities and boost prices, according to a Standard Bank econom i c analyst, Jan Duvenage, here Monday.
Duvenage said that Namibia’s economy had not escaped the global economic downtur n, adding that Namibia’s overall reliant on commodity exports had resulted in th e economy bearing the brunt of a fall in prices and demand for mineral commoditie s .
Duvenage said in a mid-year economic outlook review for Namibia that the global economic slowdown and fall in commodity prices had impacted directly on Namibia’ s economic outlook.
Standard Bank, which has operations in 17 African countries, including Namibia, said that falling exports, particularly diamonds, had hurt the country’s gross d o mestic product (GDP).
Exports, which contribute about 47.9 per cent to GDP, are expected to shrink by 5 per cent. Duvenage said that Namibia’s diversified commodity base could be tur n ed into an advantage especially now that there were green shoots of economy reco v ery on the global market.
Rich in diamonds, Namibia is fast emerging as one of the world’s largest produce rs of uranium and according to Standard Bank, “Namibia now commands a sixth posi t ion in global primary uranium supply.
“Although Namibia’s export profile is skewed towards commodities, the compositi on of its commodity exports is relatively advantageous and diversified, as some e xport commodities have not been as adversely affected by the commodity anti-bubb l e. For example, copper, uranium and gold prices have stabilized or held on to re c ent gains.”
However, the analyst warned that consumption expenditure growth would remain sub dued in the medium term.
“We therefore expect that the economy will contract by 0.7 per cent in 2009 as e xport earnings fall on account of lower commodity prices and volumes, lower inte r national trade and a shrinking global economy,” Duvenage said.
“We expect the economy to grow by 1.8 per cent in 2010 on the back of healthier global economy and partial but subdued recovery of commodity prices and export v o lumes,” he added.
The analyst also warned that Namibia, like any other African economies reeling f rom the effects of the global slum, was not out of the woods yet.
“There are many downsides as the global economy is not out of the woods yet. New problems are emerging in the US, such as banks hoarding cash rather than lendin g to consumers and businesses, and commercial real estate could also enter bubble
territory,” he warned.
The Standard Bank analyst also noted that the global recession was still firmly entrenched despite several economic indicators signalling “green shoots of recov e ry warning that it is too early to be optimistic about global growth.
“Namibia will not escape the global economic downturn. However, metal and minera l prices may have reached a floor and should help boost export earnings and econ o mic growth.”