Economy set to pick up in 2006: OMAM

THE Namibian economic growth rate of 5,9 per cent recorded in 2004 is expected to slow to just above three per cent last year, but should pick up slightly to below four per cent during 2006.

This was the view of Johannes !Gawaxab, CEO of Old Mutual Asset Managers, when he reviewed the performance of the financial markets in Windhoek yesterday. He said the fishing sector woes would continue with lower quotas, seasonal closures, a stronger currency and rising energy costs.The resultant effect is likely to be felt in the manufacturing sector, which relies largely on fish products for exports.”A strong currency and increased competition are expected to provide further impediments to the manufacturing sector.”He also said widespread rain and favourable prospects for the agriculture sector, additional mining production from the Elizabeth Bay diamond and the Langer Heinrich uranium mines, coupled with strong commodity prices, should provide the necessary impetus for economic growth.Gawaxab added that inflation – rising mainly due to increasing transport and food prices – was expected to remain relatively suppressed.Current international conditions remain relatively supportive for Namibian and South African markets.Solid interest in commodity markets by investors as well as firm demand, specifically from China and India, continued to lend support to commodity prices, which bodes well for the Namibian and South African mining sectors.Subsequently, the South African rand – to which the local currency is pegged – was expected to remain relatively strong for the foreseeable future, said !Gawaxab.He said the tax relief announced in the South African budget for 2006/7 was expected to sustain robust consumer spending, adding that the South African government continued to emphasise its six per cent economic growth target, boosting positive growth sentiment and supporting capital formation.He also said that global economic growth continued to be “reasonably robust” and supportive of emerging markets.”Despite global inflationary pressures remaining suppressed, central banks remain vigilant of the upside risks of higher energy prices, falling unemployment and stronger credit growth.In addition, international risks such as the global economic imbalances and a downturn in international housing markets remain,” said !Gawaxab.He said the fishing sector woes would continue with lower quotas, seasonal closures, a stronger currency and rising energy costs.The resultant effect is likely to be felt in the manufacturing sector, which relies largely on fish products for exports.”A strong currency and increased competition are expected to provide further impediments to the manufacturing sector.”He also said widespread rain and favourable prospects for the agriculture sector, additional mining production from the Elizabeth Bay diamond and the Langer Heinrich uranium mines, coupled with strong commodity prices, should provide the necessary impetus for economic growth.Gawaxab added that inflation – rising mainly due to increasing transport and food prices – was expected to remain relatively suppressed.Current international conditions remain relatively supportive for Namibian and South African markets.Solid interest in commodity markets by investors as well as firm demand, specifically from China and India, continued to lend support to commodity prices, which bodes well for the Namibian and South African mining sectors.Subsequently, the South African rand – to which the local currency is pegged – was expected to remain relatively strong for the foreseeable future, said !Gawaxab.He said the tax relief announced in the South African budget for 2006/7 was expected to sustain robust consumer spending, adding that the South African government continued to emphasise its six per cent economic growth target, boosting positive growth sentiment and supporting capital formation.He also said that global economic growth continued to be “reasonably robust” and supportive of emerging markets.”Despite global inflationary pressures remaining suppressed, central banks remain vigilant of the upside risks of higher energy prices, falling unemployment and stronger credit growth.In addition, international risks such as the global economic imbalances and a downturn in international housing markets remain,” said !Gawaxab.