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Namibia Business Forecast Report Q2 2010

Recovery Under WayT he year 2010 should mark the beginning of an era of relative stability, both economic and political.The recession is past and a range of indicators paint the picture of a Namibian economy on therebound, with real GDP growth expected to rise steadily towards 5.0% over the next few years.The only source of uncertainty is the lingering damage to Namibia's fiscal outlook, with the deficitprojected to widen this year as the shortfall in Southern African Customs Union tariff revenuesfrom 2009 is disbursed one year on. On the political front, the ruling SWAPO party has once againdominated the polls and the party's strong showing, even amid recession, minor scandal and shiftingdemographics bode well for its continued hold on the government.I n this Business Forecast Report, we look at Namibia's long-term political outlook. With the latestelection results indicating that support for SWAPO is undiminished, we believe the party is likelyto continue ruling the country for the next 10 years. Because of this, the country is likely to enjoygeneral political and policy stability over the decade. The biggest challenge to the government willbe the failure so far to generate broad-based economic growth ' indeed, the distribution of incomeremains one of, if not the most, unequal in the world. Nonetheless, we believe Namibia's governmenthas so far demonstrated competence in its rule and the focus on education as a means ofaddressing inequality is credible, helping it maintain high support levels from the population.O n the economic front, real GDP growth is rising again, led by exports. Over the next several years,the uranium mining sector should be a major driver of growth, with output expected to quadrupleas new mines open and the industry overtakes diamonds in terms of contribution to GDP. Withregards to monetary policy, we believe the government will hold interest rates at 7.00% for thebetter part of the year before beginning the tightening cycle. Inflation remains muted and past 2010we see energy prices ' which are currently the biggest driver of inflation ' stabilising. Governmentfinances are not as strong, with a large deficit projected for this year, but very low levels of externalborrowing and the country's high sovereign risk rating largely mitigate the threat of the deficit, inour view.N amibia enjoys a strong business environment by regional standards, as illustrated by its adoptionof the Basel II Regulatory Regime (only the third Sub-Saharan African country to do so). Thecountry has well developed infrastructure by Sub-Saharan African standards, but further investment,particularly in transport, is slated for this year. With an abundance of natural resources ' notablyuranium ' Namibia can expect to see an increase in foreign direct investment focused on relatedprojects as the global recession comes to an end. Indeed, several major mines are expected tobegin production over the next four years.
Published on: Mar 3, 2016
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Transcripts - Namibia Business Forecast Report Q2 2010

  • 1. Find Industry reports, Company profilesReportLinker and Market Statistics >> Get this Report Now by email!Namibia Business Forecast Report Q2 2010Published on April 2010 Report SummaryRecovery Under WayT he year 2010 should mark the beginning of an era of relative stability, both economic and political.The recession is past and a range of indicators paint the picture of a Namibian economy on therebound, with real GDP growth expected to rise steadily towards 5.0% over the next few years.The only source of uncertainty is the lingering damage to Namibias fiscal outlook, with the deficitprojected to widen this year as the shortfall in Southern African Customs Union tariff revenuesfrom 2009 is disbursed one year on. On the political front, the ruling SWAPO party has once againdominated the polls and the partys strong showing, even amid recession, minor scandal and shiftingdemographics bode well for its continued hold on the government.I n this Business Forecast Report, we look at Namibias long-term political outlook. With the latestelection results indicating that support for SWAPO is undiminished, we believe the party is likelyto continue ruling the country for the next 10 years. Because of this, the country is likely to enjoygeneral political and policy stability over the decade. The biggest challenge to the government willbe the failure so far to generate broad-based economic growth indeed, the distribution of incomeremains one of, if not the most, unequal in the world. Nonetheless, we believe Namibias governmenthas so far demonstrated competence in its rule and the focus on education as a means ofaddressing inequality is credible, helping it maintain high support levels from the population.O n the economic front, real GDP growth is rising again, led by exports. Over the next several years,the uranium mining sector should be a major driver of growth, with output expected to quadrupleas new mines open and the industry overtakes diamonds in terms of contribution to GDP. Withregards to monetary policy, we believe the government will hold interest rates at 7.00% for thebetter part of the year before beginning the tightening cycle. Inflation remains muted and past 2010we see energy prices which are currently the biggest driver of inflation stabilising. Governmentfinances are not as strong, with a large deficit projected for this year, but very low levels of externalborrowing and the countrys high sovereign risk rating largely mitigate the threat of the deficit, inour view.N amibia enjoys a strong business environment by regional standards, as illustrated by its adoptionof the Basel II Regulatory Regime (only the third Sub-Saharan African country to do so). Thecountry has well developed infrastructure by Sub-Saharan African standards, but further investment,particularly in transport, is slated for this year. With an abundance of natural resources notablyuranium Namibia can expect to see an increase in foreign direct investment focused on relatedprojects as the global recession comes to an end. Indeed, several major mines are expected tobegin production over the next four years. Table of ContentExecutive Summary ... 7Recovery Under WayNamibia Business Forecast Report Q2 2010 Page 1/5
  • 2. Find Industry reports, Company profilesReportLinker and Market StatisticsChapter 1: Political Outlook ...... 11Long-Term Political Outlook .....11Stability Likely To Prevail Over The Coming DecadeWhile Namibias enormous income inequality poses some risks to political stability, we believe the population islikely to continue supporting the SWAPO government for the next 10 years, ensuring broad political stability andcontinuity.Table: Political Overview .. 11Chapter 2: Economic Outlook ... 15Economic Activity ....17Economic Recovery On TrackA range of economic indicators give the same picture Namibia is steadily emerging from the recession of 2009.Table: ECONOMIC ACTIVITY .....17Monetary Policy .......19Interest Rate Hold To Persist Until Year-EndWe believe Namibia will continue to hold its benchmark interest rate at 7.00% until the end of 2010, when we seean initial hike of 50 basis points.Table: MONETARY POLICY ...... 19Fiscal Policy .............21Budget: The Recessions EchoA large portion of Namibias revenues are derived from SACU taxes, which are only disbursed with a one-year lag,meaning the shortfall in import tariff revenues during 2009 will only be felt this year.Table: FISCAL POLICY ............. 21Sovereign Risk Rating ..............23Eurobonds: Selectivity Is KeyFor Q110, we use our proprietary sovereign risk ratings to assess the relative attractiveness of several forthcomingeurobonds.Chapter 3: 10-Year Forecast ..... 27The Namibian Economy To 2019 .............27Robust Growth Expected To 2019Thanks to the countrys strong primary sector, we expect growth to prove robust in the long run, averaging 4.7%from 2010 to 2019.Table: Long-Term Macroecono mic Forecasts ..............27Chapter 4: Special Report ......... 31Political Risk In The Next Decade ...........31What To Expect In 2010-2019Table: Countries Facing Major Leadership Succession In 2010-2019 .......... 32Table: Countries At Risk Of Major Political Upheaval ..... 34Table: Countries At Risk Of Interst ate Conflict Or Heightened Bilateral Tension............... 38Table: Countr ies Facing Secess ion ist Or Autono my Mo vements , Insurgenc ies , Or Civil Wars ... 41Table: Pivot al States ........... 43Chapter 5: Business Environment............ 45Business Environment Outlook ...............47Table: BMI BUSINESS AND OPERATIONAL RISK RATINGS... 48Institutions ..............49Table: BMI LEGAL FRAMEWORK RATINGS ............ 50Table: LABOUR FORCE QUALITY ............. 52Market Orientation ..53TABLE: MIDDLE EAST & AFRICA, ANNUAL FDI INFLOWS....... 54Table: BMI TRADE RATINGS ... 56Infrastructure ..........57Namibia Business Forecast Report Q2 2010 Page 2/5
  • 3. Find Industry reports, Company profilesReportLinker and Market StatisticsOperational Risk ......58Chapter 6: BMI Global Assumptions........ 59Global Outlook ........59EM Still Showing Signs Of OutperformanceTABLE: GLOBAL ASSUMPTIONS ............... 59table: DEVELOPED STATES REAL GDP GROWTH FORECASTS ..... 60table: EMERGING MARKETS REAL GDP GROWTH FORECASTS ...61TABLE: GLOBAL & REGIONAL REAL GDP GROWTH FORECASTS ... 62Namibia Business Forecast Report Q2 2010 Page 3/5
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  • 5. Find Industry reports, Company profilesReportLinker and Market Statistics Payment Information Please indicate the payment method, you would like to use by selecting the appropriate box. Payment by credit card Card Number: ______________________________________________ Expiry Date __________ / _________ CVV Number _____________________ Card Type (ex: Visa, Amex…) _________________________________ Payment by wire transfer Crédit Mutuel RIB : 10278 07314 00020257701 89 BIC : CMCIFR2A IBAN : FR76 1027 8073 1400 0202 5770 189 Payment by check UBIQUICK SAS 16 rue Grenette – 69002 LYON, FRANCE Customer signature:   Please note that by ordering from Reportlinker you are agreeing to our Terms and Conditions at http://www.reportlinker.com/index/terms Please fax this form to: Europe, Middle East and Africa : + 33 4 37 37 15 56 Asia, Oceania and America : + 1 (805) 617 17 93Namibia Business Forecast Report Q2 2010 Page 5/5

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