Fitch downgrades Namibia's economic outlook

Source: Xinhua| 2019-02-21 20:53:26|Editor: xuxin
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WINDHOEK, Feb. 21 (Xinhua) -- Credit rating agency Fitch on Thursday revised the Outlook on Namibia's Long-Term Foreign-Currency Issuer Default Rating to Negative from Stable, citing weak economic growth in the southern African nation.

Fitch in a statement on its official website said the revision of the Outlook to Negative reflects Namibia's weak growth performance and the downward assessment of growth prospects with adverse implications for the government's ability to stabilize the public debt trajectory.

"The economy is yet to rebound from the downturn that followed the 2010-2015 mining and construction boom. Our previous expectation of a gradual growth recovery in 2018 has not materialized," said the rating agency.

Namibia's GDP declined for the 10th consecutive quarter in the third quarter of 2018, and Fitch now expects it to have contracted by 0.4 percent in 2018 versus their earlier forecast of the 0.6 percent growth, following a 0.9 percent fall in 2017.

"The contraction reflects weak domestic demand, due mostly to fiscal consolidation, lower private investment and soft disposable income growth, as well as sluggish activity in neighboring South Africa and Angola. This was only partly offset by robust activity in mining mostly due to the ramping-up of China's Husab mega-mine's production of uranium," Fitch added.

Fitch now expects a more tepid economic recovery in 2019, given the weaker starting point and persistent headwinds.

"We forecast GDP to grow by 0.7 percent in 2019 and 2 percent in 2020," the agency added.

According to Fitch, the pick-up in activity will be driven by continued growth in mining, while domestic demand will slowly bottom out, lifted by a rise in public investment supported by a four billion Rand (288 million U.S. dollars) loan from the African Development Bank.