• September 19th, 2019

Mining and tourism sectors to drive growth in 2017 - SSS

Business & Finance
Business & Finance

Windhoek One of Namibia’s leading stock brokerages, Simonis Storm Securities (SSS), expects domestic economic growth for 2016 to be 2.5 percent, down from the 5.3 percent in 2015. The main drivers of this reduced growth include a struggling Fiscus and slower private sector credit extension (PSCE), which have led to significantly slower construction activity. Construction has been the main private sector driver of the economy over the last three years. At the same time the looming water crisis has severely affected the manufacturing and agricultural sectors. SSS expects expect 2.8 percent GDP growth for 2017, mainly on the expectation of a strong mining sector in 2017. “We forecast gross domestic product (GDP) for 2017 at 2.8 percent with an expectation of a stronger mining sector on the back of stronger commodity prices and higher output across the board. The sectors that we believe will do well this year are mining, due to a recovery in commodity prices, and tourism, due to a weaker rand and increased Namibian competitiveness compared to Botswana and other countries in region,” explained SSS’s director of research and securities, Purvance Heuer. He added that if normal rainfall is experienced and the mines produce at full capacity, then the economy could grow significantly faster. He noted that sectors that are expected to continue to perform poorly are fishing, due to scarce resources and regulatory challenges, and construction, due to indebtedness and lower government spending. “With regard to the currency we expect continued volatility and the currency to remain weak. Political tension and a divided African National Congress (ANC), coupled with structural challenges that will have a negative effect on the economy and current account, are some of the reasons,” said Heuer. Interest rate uncertainty and high inflation expectations might further lead to rand volatility as well. US monetary policy and SA political uncertainty are expected to add to this anticipated volatility. “We expect inflation to continue its upward trajectory in 2017, averaging 6.8 percent in 2017, compared to 6.5 percent in 2016. Food inflation, a weaker rand exchange rate, higher oil prices and increased tariffs will be the main drivers in 2017. We anticipate inflation to average 6.5 percent in 2016 and 6.8 percent in 2017 before moderating to 6.1 percent in 2018,” Heuer stated. Interest rates are anticipated to rise during the course of 2017 and SSS expects the Bank of Namibia to hike the benchmark repo rate at least twice in 2017 by a total of 0.50 percent. This is on the back of at least one rate hike in South Africa and the United States.
New Era Reporter
2017-01-10 10:15:12 2 years ago

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