By Business Reporter
THE February 2017 economic outlook update released by the Bank of Namibia shows that domestic economic growth -estimated to have slowed to 1.0 percent in 2016- is now expected to improve to 2.9 percent in 2017.
The estimated growth rate is much lower compared to the November 2016 update, which was projected at 2.5 percent and 4.0 percent for 2016 and 2017, respectively.
The lower growth expectation for 2016, when compared to the last update is due to deeper
contractions in diamond mining and construction than earlier expected.
The domestic economy is estimated to have slowed in 2016, with good recovery expected during 2017 and 2018. “Real GDP growth is estimated at 1.0 percent in 2016 and projected to increase to 2.9 percent and 3.8 percent in 2017 and 2018, respectively. The 2016 growth estimate represents a downward revision of 1.5 percentage points from the estimate of 2.5 percent in November 2016. This was mainly attributed to a deeper than expected contraction in sectors such as diamond mining and construction. There were some improvements in the uranium-mining sub-sector and a lesser contraction in the agriculture sector; however, these developments were not strong enough to mitigate a slowdown in overall growth estimate for 2016. Over the medium-term, growth will mainly be supported by anticipated recovery in both agriculture and diamond mining, as well as, improved growth in uranium mining and transport and communication sectors,” explained the BoN report.
The central bank also said that risks to the domestic economy remain definite since the last economic outlook update in November.
“Such risks include low commodity prices and global uncertainty emanating from trade relations between the US and her trading partners. Despite the recent uptick in the uranium price, the reverse in this price could lead to deterioration in Namibia’s terms of trade and exert pressure on both the current account balance and international reserves. Furthermore, the recent outbreak of armyworms in some parts of the country and in the Southern African region constitute a major risk to growth in the agricultural sector,” the bank said.
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