GDP Expected to Grow 5,5 Percent in 2015

SIMONIS Storm Securities is forecasting that the GDP will grow by 5,5% this year.

The firm’s manager’s survey showed that 82,5% of businesses believe that interest rates will rise during the course of 2015.

Economist Daniel Kavishe presented the results of the annual survey and gave an economic outlook for Namibia during a meeting on Friday.

According to the survey, 60% of managers expect the same outlook for GDP in 2015 as was the case in 2014 with economic growth ranging between 5% and 6%. 50% of the respondents expect inflation to be higher in 2015 than in 2014 while 55,6% of the managers expect growth in their own capital expenditure.

“We expect economic growth for 2014 to be 6,5%, up from our previous 2014 forecast of 4,8%. Our upwards revision is due to increased investment by SOEs, a pickup in local demand, new government industrial policies, substantial FDI and the improving global economic backdrop,” said Kavishe.

He said the company expects growth to come in at 5,5% in 2015, as government spending consolidates relative to the spending in 2014.

“A big challenge facing Namibia is the rate at which imports are growing – albeit necessary for growth, the current expansion of the trade deficit could lead to a slower rate of growth than anticipated,” he said.

Kavishe said another major issue is the rising cost of electricity, water, and land. He said these factors are likely to hamper businesses in key sectors causing them to operate at sub-optimum levels and the situation could deteriorate before it gets better over the next couple of years. According to SSS research, the trade deficit has expanded from 2% to 28% of GDP since 2007.

Commenting on the rand, Kavishe said the SSS expects continued rand volatility during 2015 with continued weakening against the US dollar.

“We anticipate an average of 11,20 against the dollar at the end of 2015.” He also said Namibia’s inflation will remain subdued in 2015, averaging 5,6%.

“The increase from our previous expectations is mainly on the back of a low statistical base during 2014, and a weakening rand.” He added that the drop in oil prices should additionally keep inflation subdued.

“Interest rates are anticipated to rise during the course of 2015, but mainly based on global economic factors which would lead key economies raising their interest rates. The movement of Namibia’s foreign reserves will additionally determine the extent of interest rates movement in Namibia – we therefore have factored in a 50 basis points to 75 basis points increase for 2015,” said Kavishe.

Source : The Namibian