Another recession warning for Nam

LOW commodity prices and volumes, denting export earnings, combined with lower international trade and shrinking global economy, will drive Namibia’s economic growth down to minus 0,7 per cent this year, Standard Bank Group Economics has said.

Releasing their mid-year economic outlook for the country on Monday, the group’s research desk joined local institutions in their forecast of a recession for Namibia in 2009.Standard Bank’s expectations are slightly gloomier than that of the Bank of Namibia (BoN), who forecast that gross domestic product (GDP) growth will slow down to minus 0,6 per cent. However, it is considerably rosier than Old Mutual Namibia Group Economist Robin Sherbourne’s estimations of minus 2,2 per cent.Namibia has already recorded its second worst quarter on record during the first three months of 2009, with seasonally adjusted growth on an annualised basis contracting by 5,8 per cent.Although expecting GDP growth of 1,8 per cent next year, Standard Bank’s economist specialising in Namibia, Jan Duvenhage, warned that ‘there are many downsides’ to the scenario.’The global recession remains firmly entrenched despite several economic indicators signalling that ‘green shoots’ are emerging,’ Duvenhage said.He continued: ‘It is too early to be optimistic about global growth and recovery prospects as several major economies are struggling to normalise their housing, banking and financial, and manufacturing sectors. New structural problems are emerging while the established ones remain unresolved.’Namibia will not escape the global economic downturn as the country is an open economy with trade equalling nearly 100 per cent of its GDP, Duvenhage said. In 2007, exports contributed 47,9 per cent to GDP, while imports’ share was 49,7 per cent.Although skewed towards commodities, Duvenhage pointed out that Namibia’s export profile is relatively ‘advantageous and diversified, as some of the export commodities have not been as adversely affected by the commodity anti-bubble’.Copper, uranium and gold prices have stabilised or held onto recent gains, while diamond prices may have stabilised, he said.Even so, Duvenhage expects exports to contract by about five per cent this year, which is the main reason for his recession forecast.Standard Bank estimates a GDP of N$49,7 billion for 2009, down from an expected N$50,1 billion last year.From next year, the group forecasts recovery from N$50,6 billion to N$55,9 billion in 2013. Percentage wise, this means economic growth of 1,8 per cent next year to 4,5 per cent in 2013.Duvenhage further forecasts an average inflation rate of 9,3 per cent for 2009, one percentage point lower than last year. He expects it to drop drastically to 7,4 per cent next year, whereafter inflation should gradually decrease to seven per cent in 2013.As far as the cost of credit is concerned, Duvenhage expects an average prime rate of 12,2 per cent this year, a drop of three percentage points from 2008. Next year should see a further reduction to 11,3 per cent, after which he forecasts a gradual decline to 10,5 per cent in 2012 and 2013.jo-mare@namibian.com.na