JOHANNESBURG: Growth in Namibia's economy will slow to between 3.5 and 4.0 percent this year, hit by problems in the domestic mining sector and a weak global outlook the International Monetary Fund said on Tuesday.
"Following strong growth in 2010, activity in the Namibian economy appears somewhat more subdued in 2011," the IMF said in a statement.
It grew by 4.8 percent in 2010, a rate the government expects slow to 4.3 percent this year.
The IMF said promising investment opportunities in the domestic economy could sustain growth of 4 to 5 percent over the medium term. The IMF also said it expected inflation to remain within single digits.
Inflation quickened to a 20-month high of 6.1 percent year-on-year in October. The country's Reserve Bank left its benchmark rate unchanged at 6.0 percent last month and said it was worried about global developments. The IMF said it was concerned about the fiscal outlook.
"While the recent Eurobond issue and robust revenues from the SACU (Southern Africa Customs Union) revenue pool should help the budget and the external position of the economy over the next year or two, significant uncertainties cloud the outlook," it said in a state-men Namibia launched a debut $500 million, 10-year Eurobond last month.
The IMF said "sound fiscal buffers" were needed to support the economy because the global economy could remain in a fragile condition for some time and SACU revenues could decline. Namibia's debt to GDP ratio is currently at 16 percent.
The IMF warned that it could rise to 30 percent by 2013-14 unless authorities scaled back on expansionary fiscal policies.
"Ongoing fiscal expansion could put pressure on the country's external position by increasing imports, drawing down official reserves, and placing pressure on the prices on non-tradable goods, which would hurt competitiveness," it said.
The IMF team was in Namibia from Nov 9-22 and met with the government for its annual Article IV Consultation.
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