Outlook for 2011-12

• The South West Africa People's Organisation (SWAPO), which has governed Namibia since the country gained independence in 1990, will dominate the political scene throughout the forecast period.
• Competition to succeed the president, Hifikepunye Pohamba, as SWAPO's candidate at the presidential election in 2014 will continue throughout his second term of office.
• The fiscal deficit will increase substantially over the forecast period as spending increases to stimulate employment; as a result, government debt is projected to rise from 20% of GDP in 2011 to 30% of GDP in 2012.
• Real GDP growth will slow to 4.2% in 2011, following the post-recession rebound in 2010, and accelerate to 4.6% in 2012 provided that demand for minerals continues to grow and prices remain firm.
• The trade deficit will widen as faster growth and new mining ventures draw in imports and technical problems limit mineral export growth; current-account deficits of 0.8% of GDP in 2011 and 4.1% of GDP in 2012 are forecast.

Monthly review

• A public-sector pay increase of around 7% was announced on April 12th; the budget for 2011/12 will be amended accordingly, increasing the fiscal deficit.
• This additional expenditure so soon after the publication of the budget has drawn criticism of the government's budgeting process.
• The Ministry of Finance has also revised its budget financing plans for 2011/12, proposing to borrow far less domestically and far more abroad.
• Uranium production at the Rössing mine in 2011 is expected to be 14% down on 2010, owing to lower ore grades being mined and reduced extraction rates; expanded production capacity at Langer Heinrich will partly offset this.
• The definitive feasibility study for the Husab uranium project proposes an open-pit mining operation and conventional processing plant, producing 6,800 tonnes of uranium per year at a capital cost of just under US$1.7bn.
• The government expects oil majors to return to Namibia if several wells due to be drilled in 2011-12 lead to commercial discoveries.
• Despite a smaller trade deficit in 2010, the current-account surplus narrowed by over 90% year on year to just N$80m (US$11m), owing mainly to a substantial investment income outflow and lower current transfer receipts.
• The overall balance of payments recorded a US$517m deficit in 2010, compared with a US$128m surplus in 2009, reflecting the smaller current-account surplus and a US$281m deficit on the capital and financial account.