SOUTH Africa announced on Tuesday her second recession in 17 years and fear is now mounting in parts of Namibia that the country’s close economic proximity to its southern neighbour may lead to a similar announcement in weeks to come.

While Tuesday’s announcement has sent shockwaves in Namibia, some local analysts have laughed off talks that the country is on the verge of making a similar announcement, citing Namibia-South Africa trade relations as basis for their claims.
Among those under the conviction that recession is just steps away from Namibia is Old Mutual Group Economist Robin Sherbourne.
The leading economist, though admitting South Africa is not Namibia’s major export market, said the country is experiencing an economic slowdown similar to South Africa as a result of the slowing world economy.
“Our major export markets are not South Africa itself but rather some of the world’s major economies. I fully expect us to experience a recession,” Sherbourne said.
He also says Namibia’s recession would rather stem from negative growth for the year 2009 rather than the formal definition of two consecutive quarters of negative growth.
“In a similar way to South Africa we too are using monetary policy (lower interest rates) and fiscal policy (higher government spending) to counter the slowdown but at the end of the day as export driven economies this will only help ease the pain rather than eliminate it altogether,” Sherbourne said.
He was also optimistic that 2010 has more in store for Namibia “even if the world economy does not bounce back quickly, partly because uranium mining is going through such a boom and partly due to the World Cup.”
“Despite all the gloom, South Africa and Namibia have attracted significant foreign capital this year which makes us unusual but which is good news,” he said.
The South African Reserve Bank (SARB) is expected to cut rates by a full percentage point from the current level of 8.5 percent, but analysts in Namibia are adamant that the Bank of Namibia is unlikely to follow suit.
“The Bank of Namibia is unlikely to follow in what SARB would do as a result of recession. They (Bank of Namibia) have announced another cut last week and their next meeting is only next month,” a source who prefers anonymity said.
The same analyst said South Africa’s recession is a result of its GDP, which at the moment is not the same as Namibia’s. “Our current GDP status would protect us from recession,” the analyst said. - This e-mail address is being protected from spam bots, you need JavaScript enabled to view it