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Namibia Country Risk Report 20 2018

Namibia Country Risk Report 20 2018

Economic growth will recover over the coming years as the Husab uranium mine moves towards peak production, making Namibia one of the world's largest uranium producers. While the economy will see a significant ramp-up in mining output, high household indebtedness will limit growth in private consumption.

The Bank of Namibia (BoN) will enact one further cut in H118, reducing its key policy rate by 25 basis points (bps) to 6.50% to maintain the country's one-to-one peg with the South African rand and support a broader economic recovery. That said, we believe that an acceleration in prices in H218 will restrict the BoN's options going forward, prompting the end of the bank's easing cycle in 2019.

Rising mining sector revenues and modest efforts at fiscal consolida-tion will see Namibia's fiscal deficits continue to fall in 2018 and 2019.

That said, limited progress in diversifying the country's revenue base, coupled with rising interest payments and a high public-sector wage bill, will see the country record moderately higher budget shortfalls in the next decade when compared to the last.

Namibia's current account deficit will begin to narrow from 2017 onwards on the back of gradually rising commodity prices and as the Husab uranium mine ramps up production. The completion of several major construction projects and regulatory uncertainty will see investment decline and better conditions in the agricultural sector will see import demand increasing. Rising export receipts and easing financing needs will see the country's external debt load slowly fall in its share of GDP.

President Hage Geingob's sizeable victory at the ruling SWAPO party's elective congress in November 2017 will help consolidate his leadership, tempering disputes between different elements of the ruling party and thus diminishing political risk. That said, proposed empowerment legislation will continue to weigh on investor sentiment as it moves towards implementation, although we do believe the final legislation will be more moderate than many investors fear.


Executive Summary
Core Views
Major Forecast Changes
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Growth To Recover Slower Than Expected
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
External Position To Remain Stable Despite Decrease In Investment
Outlook On External Position
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
TABLE: TOP-FIVE GOODS EXPORTS IN 2016
TABLE: TOP-FIVE GOODS IMPORTS IN 2016
Monetary Policy
One Last Cut Before End Of Easing Cycle
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
SOE Reform Moving Ahead, But Structural Challenges Remain
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES FY2017/18
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Chapter 2: 10-Year Forecast
The Namibian Economy To 2027
Resources Will Remain A Key Growth Driver
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Empowerment Framework Will Weigh On Investor Sentiment
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Stability Likely To Prevail Over The Coming Decade
Chapter 4: Operational Risk
Operational Risk
TABLE: OPERATIONAL RISK
Business Crime
TABLE: BUSINESS RESPONSE TO RISK IN NAMIBIA
Education
Chapter 5:BMI Global Macro Outlook
Trade Tensions Take Centre Stage
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: NAMIBIA – MACROECONOMIC DATA & FORECASTS

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