Daniel Motinga, Senior
Manager Research and Development at First National Bank Namibia has revised the annual GDP
growth outlook downwards from 4,5% to 3,9% in the recent Africa monthly report
by RMB (Rand Merchant Bank) on Global Markets research.
Motinga: "We believe the economy expanded by 2.8% in 1H13 and expect most of
the momentum to be in 2H13. Our biggest concern is the sluggish pace of private consumption
growth, which registered an 8% increase in 2012. We forecast a slight improvement to 8.3% in
2013, largely supported by tax relief. We are also becoming less bullish on investment spending growth
given the large base established in the prior year."
Motinga added that investment spending rose by 19.7%
in real terms in 2012, a feat impossible to replicate in 2013, particularly as there
was a deceleration in private sector investment spend. He continued to say that
on the demand side, imports would detract from growth as they continued to
expand near 12% y/y compared to exports, which were likely to recover from 4.7%
y/y in 2012 to 8% in 2013. Said Motinga "However, over the medium-term we see growth
quickening from 2014 onward as investment spending recovers particularly in
the construction space. Our view of flat interest rates over the medium-term
should also entice businesses to draw down on facilities much more aggressively
and encourage the creation of capacity for future growth."
In the report Motinga also talked about the production
side and advised that they continued to believe that agriculture will contribute
significantly to growth this year, while uranium production was picking up
steadily. Langer Heinrich, a current producer, reported a 10% increase in
production in 2Q13 vs. 1Q13 despite the slump in uranium prices post-Fukushima.
With regard to inflation he said that inflation printed at 6.2% in June which was lower than the
forecast of 6.3% on account of the better than
expected performance in the food inflation component. “However, most of the
pricing pressure is coming from the services
component, which suggests that the pricing power has probably shifted from goods producers to service providers. Services inflation accelerated to 9.0% y/y from 8.5% in May
compared to goods inflation which stood at
4.6%. However, overall inflation is decelerating on monthly basis from 0.2% in
March to - 0.2% in June. Food inflation
quickened in line with expectation, though less strongly than anticipated, coming in at 7.6% in June compared to 7.4% in
May. Transport inflation is likely to re-accelerate
in July as fuel price effects filter through.”
On the topic of monetary policy Motinga
said that the BoN believed that inflation was currently at tolerable levels and
that monetary policy should continue to support growth, given the external risk
to the growth environment. "Although we share the bank’s sentiment, we
interpret the statement to mean that current policy, characterised by low interest rates will
prevail this year. We think the current Rand (ZAR) volatility could persist, reducing
the likelihood of an interest rate adjustment this year. Therefore, we are sticking
to our core view of flat rates for 2013 and 2014. As always, there are downside
risks to our view but we are not attaching significant probabilities to these
outcomes on account of the inflation risk, which might manifest in the anchor
economy."
For more information please contact Vicky Muranda,
Manager: Corporate Communications at FNB Holdings on telephone: (+264 61) 299 2944.
FNB Namibia is the largest
locally listed company on the Namibian Stock Exchange, representing a total
market capitalisation of more than N$ 4.9 billion. FNB
Namibia provides fully integrated financial services solutions through a wide
reaching network. The FNB Group is one of the largest employers in Namibia with
a workforce of more than 1,800 people.
Comments
Post a Comment