2008-01-29Staff Report 2 "By Catherine Sasman WINDHOEK Namibia's economy is expected to grow at 4.7 percent, as opposed to the growth rate of 3.7 percent last year. The economic outlook for this year, said the Bank of Namibia (BoN), is largely influenced by the mining sector, particularly the increase in uranium production. Strong growth is foreseen in the tertiary sector, with the tourism sector expected to do well. Similar growth will take place in the construction (9.5 percent) and manufacturing (5.3 percent) sectors. A worry, however, is that the anticipated growth will be ""job-less"" as Gross Domestic Product (GDP) growth does not automatically translate into the creation of more jobs. Tjiveze Tjipe, senior economist with the BoN said this is also because the mining sector is capital intensive. He said this necessitates the fast tracking of structural reforms to achieve a higher growth rate for meaningful reduction in poverty rates. The risks to the average inflation rate pegged at 7 percent this year are the rising oil and food prices, high interests and an expected slowdown in the world economy. The global economy is expected to moderate to 4.8 percent, down from last year's 5.2 percent. Notwithstanding, growth in sub-Saharan Africa is expected to reach 6.8 percent from 6.1 percent last year. This anticipated growth is partly due to the rising production in oil exporters and strong domestic investment in oil importers, fuelled by continued progress in stabilising economies. The region also benefited from the strong demand for commodities, increased capital inflows and debt relief. Except for Zimbabwe where inflation has reached four digit figures, inflation in sub-Saharan Africa is expected to decline to 6.8 percent from 7.5 percent. Diamond output will pick up by 7.8 percent, due to an increase in offshore mining activities, with diamond production expected to reach the 2.5 million carat mark. Other mining activities are similarly expected to grow by 21.8 percent. Agricultural production, however, is likely to slow down to 2.9 percent. Beef and small stock marketed last year increased, but is projected to decelerate on account of good rainfall prospects this season. Farmers are thus likely to rebuild their herds, which will lead to smaller output. Also due to the favourable rainfall outlook, crop production will be high. Equally, the Government's commitment to rural development as pronounced in the National Development Plan 3, envisions a greater growth in this sector. The outlook for fishing is less favourable due to concerns about the sizes of fishing stocks, which has seen a reduction in the total allowable catch (TAC) figures. Over the last three years this sector has buckled under the weight of increasing oil prices, low market prices and adverse oceanic conditions. The TAC for hake, horse-mackerel and pilchards are expected to be further reduced this year. The up side for the fishing sector, said the BoN, is the positive exchange rate to fish exports. A 3.5 percent growth is foreseen in the hotel and restaurant sector, which is lower than last year's 4 percent. This, the BoN said, is due to the weaker Namibian dollar and developments at accommodation establishments. Although an 11 percent growth is anticipated in the transport and communication sector, the telecommunications sector is likely to be adversely affected by the 15 percent value added tax imposed on all pre-paid mobile phone services. The growth in the transport sector is seen against the background of increased activity in other sectors such as mining and construction. BoN further anticipates a strong external current account, with a surplus increase of about 18 percent on Southern African Customs Union (SACU) revenue. " 2008-01-29Staff Report 2
