Low Metal Prices May Hit Economy

DECLINING metals prices is one of the potential dangers to economic growth this year. Namibia exports copper and zinc among other metals.

“The key risks to the outlook include both the high debt levels and unemployment rates in developed economies, coupled with decreased commodity prices. The latter might negatively affect Namibia’s exports, going forward,” said deputy Governor of the Bank of Namibia, Ebson Uanguta when he released the 2014 quarterly report this week.

Uanguta said the performance of the Namibian economy was satisfactory during the first quarter of 2014.

He said available indicators show that the secondary and tertiary industries performed relatively well, while the primary industry showed some weaknesses. The report showed that favourable performance in the secondary industry was supported by increased public investment in the construction sector, coupled with a rise in planned private property developments. Within the manufacturing sector, the production of blister copper and soft drinks increased relative to the first quarter of 2013, and contributed significantly to the overall growth in the secondary industry, the report said.

The central bank said real turnover for wholesale and retail trade grew robustly, supporting growth of the tertiary industry.

The transport sector’s performance weakened, due to low cargo volumes handled during the review period. The primary industry also posted sluggish growth during the first quarter of 2014, compared to the same quarter of 2013, due to low mineral production, particularly for uranium and zinc concentrate, the report said.

During the first quarter of 2014, growth in the credit aggregates continued to be robust, while inflation remained within single digits.

The government’s total debt as a ratio to GDP rose slightly to 24,5% but remained significantly below the government’s debt ceiling of 35% of GDP.

“Looking ahead, global growth is expected to expand during the remainder of 2014, but the decreasing international commodity prices remain a major risk to the domestic outlook. The IMF projected an increased global growth for 2014 with fragility and uncertainty continuing to characterise the outlook,” said Uanguta.

Source : The Namibian