Namibia could be forced to scale down her projected economic growth averaging 3.8% if the ongoing economic unrest caused by instability in Europe and rising global fuel prices persist, the Bank of Namibia has concurred.
BoN admits they will have a torrid time coming up with a constant figure for the projected Gross Domestic Product (GDP) growth as fluctuations on a global economic scale have become a recurrent feature.
The poor state of affairs will see the already burdened Namibian consumers digging deeper into their pockets to sustain a decent living while chances of a relief remain gloomy.
To add insult to injury the country’s manufacturing, agriculture and diamond producing sectors have not been doing their best in the previous two months.
Agriculture which contributes significantly to the country’s economy saw a massive decrease on the number of livestock sold while the closure of some diamond sites by the country’s major diamond producer, Namdeb, dwindled earnings.
“We are not yet certain about the projections because they keep changing and the Central Bureau of Statistics is still to release the official figure. So, definitely, if the ongoing uncertainities in the world continue we will also feel the cold,” said Ipumbu Shiimi, Bank of Namibia Governor in a question and answer session at the last monitory policy announcement last week.
Shiimi added,“I would also not want to hang myself by giving a figure now because a lot continue to happen and we will have to wait and see.”
BoN also admitted the country’s number one enemy remains inflation which is expected to continue on an upward trend although it will fall short of reaching double figures by the end of the year.
“Weak economic indicators in the world and a growing unemployment rate in developed and developing countries will also not spare Namibian consumers. In this regard we have decided to keep the repo rate unchanged at six percent,” he said.
Although he revealed that the country’s foreign reserves are well stashed at N$13b to keep the local current afloat and balanced with the South African rand, he bemoaned the growing borrowing rate which BoN said has been on the increase.
“Borrowing has drastically increased and in most cases the money is being used to import cars, which is not really helpful to our economy,” Shiimi noted.
Shiimi also conceded that the projected stunted growth which is expected to affect the South African economy will definitely bite Namibia as well.
However, it is not all doom and gloom for the multi sectored Namibian economy as the BoN notes that the construction sector has been robust thanks to massive Government expenditure on public buildings and an equally improving private sector financing in construction.
BoN worries come at a time when the International Monitory Fund has issued a warning that although sub-Saharan African countries are expected to grow their economies by 3.9% on average with South Africa, which has an unbreakable umbilical connection with Namibia, most likely to see the worst of its economic times this year.