6 May 2005
Windhoek — Emerging markets, such as Namibia, are in for a field day, says Old Mutual Asset Managers' (OMAM) economist and analyst Rian le Roux. This is because of the favourable trend in the global economy carried over from 2004, says le Roux.
He was addressing the business community at the OMAM's breakfast meeting in Windhoek last week. Strong economic growth and rising commodity prices will push up export volumes and attract capital inflows into emerging markets.
The reasons why the global market is favourable to South Africa, says le Roux, are the structurally solid growth in China and India, although the market takes the growth with a pinch of salt because of energy prices and policy tightening, a strong demand for commodities - of which prices are high - and a soft dollar. Le Roux says Namibia and the region will benefit from the spin-off effect. Namibia, in particular, is expected to register a GDP growth of between 3.6% and 4.5%, and inflation is estimated to average between 3% and 5%.
Currently South Africa's commodity export price index is almost on par with where it was in the early 1980s. And the overall economy is said to be in a state last seen in the 1960s. Strong growth, low inflation and the rand again being normal currency with less structural risk - although the rand may remain volatile. To sum up, le Roux said "the global environment is fundamentally more South African friendly" even though the ride might be bumpy here and there because of the China impact. For investors, and those will little cash to spare for a rainy day, it is advisable then to put money into equities, as opposed to bonds or property or betting it against the rand itself. Equities are solid and are more likely to offer real returns.
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