ABOUT NAMIBIA
GLOBAL AND REGIONAL GROWTH
BY IJG SECURITIES
The global economic upswing that started in mid-2016 prevails still. Growth has been accelerating in the developed economies of Europe, Japan and the United States, after a period of stagnant performance. This growth has been buoyed by an uptick in growth in India and China which has had a positive impact on commodity prices in general. The global recovery however remains fragile to some extent with a number of economies not participating in this growth. One such example would be South Africa which continues to record only modest GDP growth figures while unemployment has been on the rise. As Namibia’s largest trading partner and the source of her currency stability (or instability), it is only natural that there have been knock on effects on the Namibian economy from South Africa’s lacklustre performance. A brief look at our Southern Neighbour reveals that GDP growth has averaged only 2.1% since 2010 and is forecast at 0.7% for 2017 before recovering slightly to 1.3% in 2018. As a result, unemployment has been on the rise and service delivery protests have been prevalent over the period. Political uncertainty has increased substantially as seen in the high turnover of finance ministers and the Rand has decayed at a more rapid rate than purchasing power parity relationships suggest that it should. The South African economy is in a fragile state and is likely to remain so for the foreseeable future. This blurs the outlook for regional trade and may lead to continued currency volatility and low investor confidence.
NAMIBIAN GROWTH
Signs of a slowdown in the Namibian economy began to emerge in 2015, and became evident in 2016. Forecasts for a rebound in
growth in 2017 have proven to be overoptimistic or premature. 2017 has thus been another trying year for the Namibian economy. GDP growth was negative for the first two quarters of 2017 with large sectors of the economy, such as construction and wholesale and retail trade, contracting. Quarterly GDP data on hotels and restaurants for 2017 also points to year-on-year contractions in this GDP category, often used as a proxy for tourism activity. However, these GDP figures are likely to be revised upwards as data providers on the tourism industry point to good performance from the industry. Tourism may well emerge as one of the silver linings in a year marred by poor performance from a large number of sectors of the economy. Other bright spots in 2017 have been the agriculture and mining sectors. Good rains have ensured a recovery in agricultural production during the year. Despite challenges such as the army worm infestation the sector is expected to post double digit real growth figures for the year. As a major proportion of the Namibian population is dependent on subsistence farming, the recovery in this sector is especially welcome relief for many. Mining and quarrying has posted similarly impressive growth for the first two quarters of 2017 (the only data released thus far). A rebound in diamond mining volumes has been a large contributor to this performance, while gold, zinc and copper have also been performing. The performance of the mining and quarrying sector has come despite a drag from uranium mining output which has suffered from a severely depressed uranium price. Uranium is expected to be a large future contributor to GDP due to the Husab mine coming on stream, but thelow price of uranium will pose a challenge going forward.
Source: NSA
w w w. n a m i b i a t r a d e d i r e c t o r y. c o m
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