Namibia will enjoy a 5.7% economic growth with low inflation in 2015, and a major boom in mining output and foreign investment is expected, according to IJG Securities Namibia.
The Namibian investment group stated in its economic preview that the country’s expansion will be driven by the ongoing construction growth in Namibia. This is likely to continue for a number of years, due to continued generous spending by government and major Foreign Direct Investment (FDI) inflows into the mining industry.
“As the construction boom slows, a major boom in mining output is to be expected, as the new mines, currently under construction, start and ramp up to full production levels,” IJG Namibia said.
As part of this boom, Namibian gold mine B2Gold has projecting a record year for gold production in 2015, with an increase of approximately 35% over its 2014 production. First copper production from Weatherly International’s Tschudi copper mine in Namibia is expected by the end of February. The China General Nuclear Power Company and Uranium Resources are also developing the Husab uranium mine, which will commence with an initial production phase later this year.
Meanwhile, inflation is expected to drop drastically through 2015 on account of cost-push factors deriving from tumbling oil prices. “Through the first half of the year, inflation is expected to slow to 4.1% from the current 4.6%, but will hover around 4.7% in 2015, well below the 5.4% level seen in 2014,” the report reveals.
“Sustained low interest rates in South Africa are likely to keep rate increases on hold in Namibia through 2015, and the most likely scenario for the country sees interest rates flat until mid-2016,” it adds. “This position will combine with FDI and fiscal policy to continue to drive imbalances in the current account, which imbalances are unlikely to be offset by the capital and financial account in its entirety, resulting in net outflows on the balance of payments and a further fall in reserves.”
Chinese investment is also expected to dominate Namibia’s mining sector in 2015. The construction of a new nuclear power station in China is increasing the nation’s demand for uranium resources, making Namibia a key target for investors. Last year, China National Nuclear Corporation bought a 25-percent stake in Paladin Energy’s Langer Heinrich uranium mine.