17 January 2013

Namibia: Economic Growth Prospects Dim

THE World Bank expects the Namibian economy to grow by 4,3% this year, lower than the average of 4,9% it is forecasting for Sub-Saharan Africa (SSA) and way below the 6,1% earmarked by Government in its Fourth National Development Plan (NDP4).

The World Bank's 'Global Economic Prospects', released on Tuesday, pegged Namibia's average gross domestic product (GDP) growth from 2013-15 at 4,6% per year - also below the 5% forecasted for SSA and way off the 6,3% average growth target of NDP4 over the same period.

For 2014, the World Bank forecasted the domestic economy to grow by 4,4% (NDP4:6,4%), while for 2015, it expects the GDP to expand by 5% (NDP4:6,3%).

The new report also echoed local sentiments that Namibia will in all probability miss the NDP4 economic growth target of 4,6% for 2012. The World Bank estimated GDP growth of 4,2% for last year.

Local economists are hoping for 3,5% for 2012 after figures of the Namibia Statistics Agency (NSA) showed that the Namibian economy is on a downward trend. NSA statistics show that the domestic economy grew by 1% and 2,2% in the first and second quarters of 2012 respectively, and declined by 5,4% in the third quarter.

"Four years after the onset of the global financial crisis, the world economy remains fragile and growth in high-income countries is weak. Developing countries need to focus on raising the growth potential of their economies, while strengthening buffers to deal with risks from the Euro Area and fiscal policy in the United States," the World Bank said.

Last year developing countries recorded among their slowest economic growth rates of the past decade, partly because of the heightened eurozone uncertainty in May and June, the World Bank said.

Although the "worst appears to be over", the eurozone crisis remain one of the risks facing SSA countries. "Should a credit crunch hit some of the larger troubled Euro Area economies, GDP growth in the region [SSA] could decline by one percentage point," the World Bank said.

The weak US economy poses another threat. "Fiscal policy paralysis in the US could curtail growth in the region by at least 0,9 percentage points in 2013," it said.

In addition, Chinese investment in SSA could cloud growth outlooks.

"With Chinese demand accounting for some 50% of many industrial metals from Africa, a disorderly unwinding of China's high investment rate could lead to deteriorating current account and fiscal balances, and cut into the region's growth prospects," the World Bank said.

Political instability, protracted industrial disputes and adverse weather conditions could also undermine growth in some SSA countries, it warned.

The World Bank forecasted that global gross domestic product will inch up 2,4% this year, from 2,3 % in 2012. In its last forecast in June, the bank projected global growth would reach 3% in 2013.

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