Namibia economy to grow again as diamonds regain sparkle

Namibia's economy is set to grow by 4.2 percent this year, after contracting last year, as diamond production rachets back up and commodity prices strengthen, the central bank said Wednesday.

- In line with the global economic recovery, Namibia's economy is expected top expand by about 4.2 percent in 2010 from an estimated contraction of 0.8 percent in 2009- Bank of Namibia governor Ipumbu Shiimi told reporters.

The improved economic outlook comes as diamond production doubled in the first five months of the year, compared to the same period of 2009, an economist said.

- During April and May this year 282,000 carats were produced, bringing production to 580,000 carats for 2010 so far -- a 102 percent increase year on year- economist Johan Steytler said.

- If current production levels continue during the remainder of 2010, total diamond production could reach 1.4 million carats, an increase of 48 percent over 2009- Steytler added.

During 2009 diamond production came to a standstill for three months as the main producer Namdeb, equally owned by the government and De Beers, instituted a production holiday due to the global economic crisis that slashed international demand. Steytler doubted that diamond production would ever return to pre-crisis levels due to the depletion of the gems. Before the global meltdown, Namibia produced some two million carats annually.