RMB forecasting good growth for Namibia
> Jonas Eiseb
Windhoek – RMB has set the tone for expected economic growth over the short to medium term by drawing inspiration from the popular 80s science fiction blockbuster – Star Wars.
The presentation was done at a breakfast meeting on Tuesday, November 3, in Windhoek.
Back to the future was the message when RMB held its end of the year economic presentation, when its analysts Isaah Mahlangu and Namene Kalili gave their insights into what they expected the medium term to hold for the growth in Namibia and South Africa.
Commenting on the health of the Namibian economy, FNB Namibia Head of Research Namene Kalili said: “the economy is creating more jobs and household incomes are rising. Consumers are however in a tight spot, with the debt to income ratio at 90.1 percent. This trend is expected to continue.”
“We also believe that the hiking cycle will be gradual. We do not think a December hike is expected but a hike is expected for March and in June,” Kalili said of the Bank of Namibia’s expected monetary policy path to be followed.
Overall, Kalili raised many bullish points about the Namibian economy, and described construction as the driver of growth for the Namibian economy, talking briefly of government’s spending on the Neckertal Dam project, the mass housing project and deepening and expansion of the Walvis Bay Port and extensive upgrades to the road network.
He added though, “we are cautiously optimistic about growth,” and made references to mining on the back of depressed commodity prices for uranium, zinc and copper.
According to him, growth for 2015 was expected to be 6.4% while inflation would be close at 5.4 percent.
Commenting on the expected outlook for the South African economy FNB South Africa analyst Isaah Mahlangu sounded a little less optimistic about the health of the South African economy.
“We are not expecting Gross Domestic Product to contract neither do we see recession. Growth for the year is expected at 1.2 percent. The squeeze for the consumers is on.
“There is also a lot of fiscal pressure and we are concerned about South Africa’s investment grading,” a situation he said would have undesirable consequences for the economy.
On the consumer front, Mahlangu described the banking sector as reluctant to lend, with Private Sector Credit Extended falling considerably from the 30 percent highs witnessed in 2013 to a low 5 percent for 2015.
According to him, the growth was negative in real terms and slower than income growth.
The situation was further exacerbated by inflation, largely driven by a severe drought, a weak Rand, municipal levies and the power crunch experienced.
Added Mahlangu: “Fixed investment is also likely to fall. All in all, we are expecting growth of 2.4% over the medium term which is basically the next three years.”
A notable concern for Mahlangu was an impending downgrade of South Africa’s investment rating, a situation he said would have dire consequences for the economy going forward.
“Tough times lie ahead,” he said, underpinning his presentation.