JOHANNESUBURG (Reuters) - Strong commodity prices and a recovery in tourism should help Namibia's economic prospects, although lower regional customs revenue could weigh on the budget, a Reuters poll showed on Wednesday.
The economy contracted by 0.8 percent in 2009 as the global downturn hit mining revenues in Namibia, the world's fourth largest uranium producer and a major diamond producer.
A Reuters survey of 8 economists put growth for 2010 at a median of 3.5, quickening to a median of 4.0 percent in 2011.
Forecasts ranged from 1.7 percent to 4.5 percent in 2010 and 2.2 percent to 4.5 percent in 2011.
"With an uptick in commodity prices, global demand and tourism, we have revised upward our growth forecast" said Business Monitor International's Alan Cameron.
Namibia's economy's is an export oriented economy that relies heavily on uranium and diamonds.
The Bank of Namibia cut interest rates by 350 basis points between December 2008 and June last year in an effort to stimulate demand.
The poll shoed inflation is expected to average around 5.8 percent for 2010, before quickening to 7 percent in 2011.
Headline inflation has been on a downtrend this year. It slowed to 4.3 percent year-on-year in last month, its lowest level in more than three-years.
SACU STOKES REVENUE WORRIES
Namibia is part of the Southern African Customs Union (SACU), and gets over a third of its revenue from shared trade duty with South Africa, Botswana, Swaziland and Lesotho.
SACU may change its revenue-sharing agreements to the detriment of smaller countries on mounting tensions due to the perception in South Africa that the bigger economy's customs receipts are bankrolling the four smaller neighbours.
With reduced revenues, the poll showed that Namibia's fiscal deficit could widen sharply to a median of 7 percent this year after a 1.6 percent shortfall in 2009.
"Revelations that SACU has significantly overestimated its revenues over the past few years, and must correspondingly correct the situation with a huge reduction of transfers to regional members, has left Namibia's fiscal and current account balances in unexpected deficit." said Cameron.
Revenue sharing was devised as a way of compensating the smaller economies for South Africa's tariff policy and its virtual monopoly on attracting external investment.
"In the quarterly bulletin of the Bank of Namibia, strong SACU proceeds supported the balance of payments in the first quarter, it is still in our projections that they will trail downwards." said Thea Fourie an economist at IHS Global Insight.
