Capricorn sees more inflation and higher interest rates

As global economies trudge into another year of economic uncertainty, Namibia’s outlook is relatively constrained with an expected slowdown in growth to 4.2% for the year. This is according to Capricorn Asset Management in its “Overview of the Namibian and Global economy”, released last week.
In the discussion on the global economy, the report shows that Namibia is still very susceptible to uranium prices which have been depressed for most of 2012. It also singles out three major areas which remain key for Namibia’s performance in 2013; exchange rates, inflation and credit growth.
Since the second quarter of last year the depreciating Namibia dollar has left money market investors wary of exchange rate shocks. The performance of the local currency is a result of the Rand’s volatility in the global market.
Despite sidestepping the fiscal cliff in the USA, the report shows the months of February and March may result in further exchange rate fluctuations with the USA facing a debt ceiling crisis. “According to experts, there is a possibility that USA will reach the debt ceiling limit. What this suggests is that there could be a downgrade of USA treasuries. When this happens (if the past is anything to go by) investment tends to gear towards the less riskier investments. The result is capital outflow which may lead to a further whimsical Rand/US$ exchange rate.”