Namibia expects mining and investment to spur economic growth

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An increase in mining output, investments in renewable energy and waning base effects are likely to continue to drive growth in Namibia, an expert said Tuesday.

“High frequency data already points towards improved mining performance,” said Ruusa Nandago, an economist from the Rand Merchant Bank (RMB) in Namibia.

Namibia’s composite mining index grew by 10 percent year on year compared to a contraction of 11 percent over the same period last year with the diamond, uranium and gold indexes all registering growth over the past year.

“The Diamond Mining Index grew by 26 percent compared to a contraction of 16 percent over the same period in 2020. The Uranium mining Index grew by 10 percent and the Gold Mining Index by 17 percent,” she said.

Meanwhile, Private Sector Credit Extension (PSCE) is gradually recovering from its 2021 lows but continues to point to weak household and business confidence as credit uptake remains low despite the low interest rate environment.

“We expect the rising interest rate environment to put further pressure on the ability for households and corporates to take up credit,” says Nandago.

Nandago said that inflation was expected to accelerate over the course of the year as the conflict keeps both global oil and food prices higher.

“The oil price will filter through to domestic fuel prices given that Namibia is a net importer of oil. We also expect the higher fuel prices to filter through to goods and food inflation as 70 percent of imports in Namibia are transported via road,” said Nandago.

The rising inflation poses downside risk to growth as it will erode consumer purchasing power and increase input costs for businesses.

“We believe retailers have limited room to absorb rising costs and will pass them through to the consumer through higher final prices,” she concluded. Enditem

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