Namibia Business Forecast Report Q3 2012

Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Despite Rising Rhetoric, 'Caprivi Question' Unlikely To Escalate
Recent protests in Namibia over the high treason trial of alleged Caprivi secessionists have revived the issue of the rebellion and
ongoing political disagreements between the government and some Caprivi politicians However, most Namibians living in the Caprivi
Strip are not interested in reopening old wounds, and we believe that there is little threat to the country's stability or the government's
ability to govern effectively
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Stability Likely To Prevail Over The Coming Decade
While Namibia's enormous income inequality poses some risks to political stability, we believe the population is likely to continue
supporting the South West Africa People's Organization government, ensuring broad political stability and continuity
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Economy To Withstand Increasing Challenges
We continue to believe that the Namibian economy will see relatively robust growth in 2012 and 2013, even as global headwinds take
their toll on the export-dominated economy With (unchanged) projections for real GDP expansion of 4 6% and 5 1% in 2012 and
respectively, we are slightly above consensus owing to our belief that investment and government spending will help to pick up some of
the slack over the medium term
TABLE: ECONOMIC ACTIVITY
Monetary Policy
External Factors Demand Continued Loose Policy
In line with our expectations, the Bank of Namibia has again held its repo interest rate steady at 6 00%, as inflation has most likely
peaked and the South African benchmark interest rate remains unchanged We continue to believe that the bank will hold its benchmark
throughout 2012 before embarking on a hiking cycle in 2013
TABLE: MONETARY POLICY
Balance Of Payments
New Data Dim BoP Outlook
Based on newly released balance of payments data, we have downwardly adjusted our outlook for Namibia's current account balance
for 2012 and beyond Whereas previously we believed that a narrow surplus would persist through 2013, recent data suggest that the
account is already in deficit, and we believe that a small shortfall equal to between 1 0% and 2 0% will linger over the coming years
TABLE: CURRENT ACCOUNT
Fiscal Policy
Employment Push To Keep Deficit Wide
The fiscal deficit in Namibia is expected to remain large as the government continues to look to spur the domestic economy through
spending and targeted employment generation We maintain our forecasts for the budget shortfall to stay in double digits as a
percentage of GDP over the coming years
TABLE: FISCAL POLICY
Chapter 3: 10-Year Forecast
The Namibian Economy To 2021
Robust Growth Expected
Thanks to the country's strong primary sector, we expect growth to prove relatively robust in the long run, averaging around 4 6%
annually over 2012 to 2021 With a stable political environment, the main risks are the limited size of the domestic market, rising income
inequality and global demand for the country's primary exports
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 4: Business Environment
SWOT Analysis
BMI Business Environment Risk Ratings
Business Environment Outlook
Institutions
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
TABLE: BMI LEGAL FRAMEWORK RATING
TABLE: LABOUR FORCE QUALITY
TABLE: AFRICA – ANNUAL FDI INFLOWS
Market Orientation
TABLE: TRADE AND INVESTMENT RATINGS
Infrastructure
Operational Risk
Chapter 5: BMI Global Assumptions
Global Outlook
World Slows As Euro Crisis Simmers
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES REAL GDP GROWTH FORECAST
TABLE: REAL GDP GROWTH CONSENSUS FORECASTS
TABLE: EMERGING MARKETS REAL GDP GROWTH FORECAST 33