20 December 2012

Namibia: 3rd Quarter Results 'Under the Weather'

Most recent official central banks statistics indicate slower growth for the 3rd quarter for this calendar year. In the Bank of Namibia quarterly bulletin, performance is seemingly lax compared to previous quarter performance. This subdued performance is sector specific. Performance in other sectors, though not sterling, is still at acceptable levels.

Speaking to the Economist, Ms Evangelina Nailenge, Deputy Director of policy research and forecasting explains that the lacklustre performance in manufacturing, agriculture and retail trade clouded the performance improvement in the local economy during the 3rd quarter.

"On the inflation front the headline inflation rose to 6.2% during the third quarter from 6.0% in the previous quarter. This increase was mainly attributed to rising food inflation associated with the industrial strikes in South Africa. But there was also an observable increase in international food prices". Inflation is further expected to increase to 6.6% at the end of the current quarter but still remain within tolerable levels.

Concerning the much debated slowdown of the South African economy (real gross domestic growth at 2.3% in the third quarter compared to 3.1% in the second quarter), it is expected to pick up to 3% annual growth in 2013, up from 2.6% annual growth in 2012. "The South African economy appears to be the most exposed economy in sub-Saharan Africa to the Euro area's spill-overs through significant direct trade and financial links with Europe. The weaker growth is likely to be transmitted to other states especially the SACU states through the common revenue pool. However this effect will not be immediate due to the time lag in the revenue sharing formula" explained Ms Nailenge. She reiterated that the domestic risks which have emerged in South Africa such as widespread labour market instability and work stoppages, have reduced output and export volumes.

The quarterly review extensively covers performance benchmarks during the past quarter as well as general reports on all sectors.

Ms Nailenge provided some insight in the state's demand on the capital market, by stating: "For the last quarter of 2012, we will be going back to the market in line with the borrowing calendar for bonds as well as treasury bills. However, the local bond auctions we have had so far, especially in December, had low subscription rates thereby resulting in low allotments when compared to the amounts on offer."

She said the bank's accommodative monetary policy has managed to cushion the impact of global declining economic activity. mitigate the economic slowdown main trading partner, South Africa, and neutralise foreign exchange volatility.

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