The local economy is expected to grow by 5,4% this year compared to 4,4% in 2013, the Bank of Namibia says in its economic outlook for 2014-2016.

“Growth will be supported by domestic economic activities, such as the construction of some relative mega projects in the mining sector, public sector programs and the energy sector that will spur domestic consumption and investment. Growth is expected to moderate in 2015, as some mining projects near completion,” the outlook says. 

The central bank says global economic growth is expected to strengthen in 2014 and 2015, whereas the domestic economy is expected to strengthen in 2014 before moderating in 2015.

The economic outlook based on IMF projections highlights that the global economy is expected to strengthen between 2014 and 2015. Global economic growth is expected to improve from 3% in 2013 to 3,6% and 3,9% in 2014 and 2015, respectively. 

The expansion in global output is supported by invigorating growth in all type of economies: advanced, emerging and developing, as well as those of Sub-Saharan Africa. 

The Sub-Saharan Africa region continues to expand at a solid pace from 4,9% in 2013 to 5,1% and 5,9% in 2014 and 2015, respectively. 

Much of the growth is underpinned by sizeable investments in infrastructure and mining, coupled with maturing investments. 

“South Africa is a notable exception where growth could be lower than the projected 2,3% and 2,7% in 2014 and 2015, respectively. The country is marred by labour issues alongside a still fragile external environment,” the central bank says. 

The outlook says risks to growth are tilted downwards. On the global front, risks from low inflation and protracted low growth due to large output gaps, especially in the Euro area, are emanating. Among emerging economies, commodity export growth would be affected by a lasting and stronger-than-projected deceleration of the Chinese economy, while international terms of trade would deteriorate as prices of raw materials remain depressed having consequences on the export-led sectors in the domestic economy. 

“Moreover, reversal of capital flows, depending on the timing of the normalisation of the US monetary policy, could weaken the domestic currency and put upside pressure on the Namibian inflation,” the report says. 

The central bank says risk to domestic growth mainly stems from the recently introduced stringent conditions by South Africa on the export of livestock and may further slow down the volume of livestock marketed and weaken growth in the livestock sector than under the baseline scenario. 

“If the above risk is prolonged, the domestic economy under the downside scenario is expected to slow to 5% in 2014. Other risks include further moderation of growth in the Namibian economy on account of depressed mineral prices, particularly of uranium with consequences for future investment and economic growth,” the outlook says.