New Market Research Report: Namibia Business Forecast Report Q1 2011

Jan. 5, 2011 - PRLog -- The Shadow Of South Africa

With the economy continuing to recover, in this business forecast report we look to some longer-term trends in Namibia, with particular emphasis on linkages between Namibia and its much larger neighbour, South Africa. Over the long run, we believe Namibian living standards will continue to converge to South Africa's, though growing divergences in the quality of each country's business environment may slow this process. Economic growth in South Africa and other regional countries may also present itself as a boon to Namibia's promising tourism industry. On a shorter horizon, South Africa's renewed cycle of monetary policy easing, followed by a forecast multi-year freeze on rates, has intensified pressure on Namibia to follow suit with a bout of interest rate cuts of its own. Finally, a depressed year for Namibian tourism in the wake of South Africa's FIFA World Cup has inflated the near-term current account deficit.

Turning to politics, Namibia's strong showing over the last several years in the Ibrahim Index of African Governance underscores our view that good governance is likely to insulate Namibia from political volatility over the long term. While the country's long-standing ruling party SWAPO urgently needs to improve the provision of healthcare and education services in the country, the Ibrahim Index illustrates the government's broad success in ensuring the rule of law, combating corruption and supplying physical infrastructure. SWAPO has continued to pull in significant majorities in each election and we believe the shortcomings in some important service areas will not be enough to change this dynamic.

Longer-term challenges for the government include reform of the business environment, which we believe is likely to slow the convergence dynamic between Namibia and South Africa, both of whom belong to the Southern African Customs Union (SACU ). In the short term, a different challenge is presented by the arrival of the long-expected shortfall in SACU revenue transfers to Namibia, compounded by weak tourism, which is likely to push the 2010 and 2011 current account into large deficits. We expect the deficit to be largely cleared, however, by 2015 as exports of good and services (notably tourism) expand. Meanwhile, growth remains below trend and we believe the government will take advantage of very low inflation to pursue further interest rate cuts.

Finally, with an abundance of natural resources - notably diamonds, uranium, zinc and copper - Namibia is projected to receive increased foreign direct investment in the mining industry over the next few years. The recession, however, has demonstrated the danger of over-reliance on the industry, and with its spectacular scenery and safari, Namibia is positioning itself as a high-end tourist destination in response. The country has well-developed infrastructure and consistently ranks among the best-governed African nations. While the country continues to make significant progress against corruption, graft remains a problem, as does an inadequately educated workforce.

For more information or to purchase this report, go to:
-  http://www.fastmr.com/prod/106382_namibia_business_foreca...

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.