The Bank of Namibia estimates that inflation will average 6.4% in 2013, a marginal decrease from the 6.5% recorded last year.
Despite the recent fuel price increase, and a January annual inflation rate of 6.6%, central bank deputy governor, Ebson Uanguta told reporters on Wednesday that there was no cause for concern on the inflation front.
He said:"With the level at which inflation is going to prevail, we are not worried about that [Inflation spiralling out of control]. We will start getting worried when it [inflation] hovers around double digit figures." Uanguta said the increase in the inflation rate in January was on the back of annual increases in administered prices, particularly tertiary education and housing. He, however, expects 2013 inflation to be externally generated particularly from international food and oil prices.
Meanwhile, the local economy is projected to grow by 4.4% this year, down from the estimated 4.6% in 2012. Moderate growth in the mining sector, particularly in the diamond sub-sector is expected to drive the deceleration in the level of growth this year.
The bank said while growth in 2012 was driven by the primary and secondary industries, growth in 2013 is expected to be driven by the secondary industries, particularly the construction sector. The mining sector, which was estimated to have grown at approximately 17.0% in 2012, is expected to see moderate growth of 3.8% in 2013, just above the overall primary sector growth expectation of 3.0%. The tertiary sector is expected to grow at 3.% in 2013, the same level of growth estimated for 2012.
Uanguta explained: "You may recall that the mining sector did not do so well in 2011 for a number of reasons. In 2011 we had rain and some of the places had floods and it was a bit difficult for the mines and then in 2012 the situation improved tremendously and that is why we saw that stronger growth. Of course in 2013 one sees normalisation because in 2011 it was a negative growth rate and in 2012 it was a bit of an improvement coming from a low base." Director of Research at the Bank of Namibia, Pastor Gonzalo attributed the fall in mining output to Namdeb's cautious optimism. Diamond output grew by 20.5% in 2012.
Gonzalo said: "Namdeb is cautiously optimistic about prospects for this year given their policy of not building inventories. As diamond mining is the leading indicator, low growth will bring down the growth rate of the primary industry."