By Hilary Mare
ACCORDING to Simonis Storm Securities the Namibian economy is expected to grow at 2.8 percent in 2017 and 2.5 percent for 2016.
These views, the firm stated, are based on discussions with key persons, surveys, analyses of economic data and forecasts carried out in the final quarter of the year.
“The main driver of this is the struggling fiscus and slower 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 water crisis has affected the manufacturing and agricultural sectors severely. We forecast 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,” Frans Uusiku, economist at the firm said.
The securities firm also affirmed that it also expects the rand to remain volatile during the course of 2017 with continued weakening against the US dollar.
“Interest rate uncertainty and high inflation expectations might further lead to Rand volatility as well. US monetary policy and SA political uncertainty will add to this expected volatility. Moody’s report last Friday indicates that the potential of no downgrade from Fitch to be lower and any downgrade to be less likely in the foreseeable future.
“Interest rates are anticipated to rise during the course of 2017. We expect the Bank of Namibia to hike the benchmark repo rate at least two times in 2017 by a total of 0.50 percent. This is on the back of at least one rate hike in SA and the US. We further expect the yield curve to rise and steepen during 2017 as inflation expectations increase,” he said.
This is the fifth year Simonis Storm has performed its online economic survey, but this time with a more expanded sample and additional questions to reflect the evolving economic conditions globally, regionally and locally. The survey was sent out to a diversified number of businesses, including asset managers, commercial banks, insurance companies, agro and agri-businesses, miners, manufacturers and contractors. Specifically, the targeted participants in this regard were chief executive officers, chief financial officers, analysts and economists. Out of 150 surveyed, 60 responses were received (a 40 percent response rate) in a period of seven days.
“We expect inflation to continue its upward trend in 2017 before it moderates in 2018 with the average for 2017 to be 6.8 percent and 2018 to be 6.1 percent. In South Africa, the South Africa Reserve Bank (SARB) expects inflation to average at 6.4 percent, 5.8 percent and 5.5 percent in 2016, 2017 and 2018, respectively. We expect oil prices to rally marginally in 2017 thus pushing up transport inflation in both SA and Namibia.
“The finance ministers of both Namibia and South Africa announced additional taxes, most of which we believe will be announced by March 2017. This will feed through to Namibian inflation as we import approximately 60 percent of our consumption from our southern neighbour,” he added.
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