By Hilary Mare
SIMONIS and Storm Securities has predicted growth for 2018 at 2.2 percent following the release of Namibia’s preliminary Gross Domestic Product (GDP) figures by the Namibia Statistic Agency (NSA) last Thursday.
The GDP numbers from NSA, estimate the domestic economy to have registered a contraction of -0.8 percent in 2017 compared to the revised 0.7 percent in 2016 with the contraction resulting from weak performance in the secondary and tertiary industries that recorded declines of -6.7 percent and -1.1 percent, respectively.
Simonis and Storm had estimated GDP to come through at -0.3 percent for 2017 on the back of the continued slowdown in the construction sector, lower collection in VAT (which is an indication of struggling retailers and wholesale trade.) and government consolidation that has affected a number of growth sectors in the economy.
“However, we expect growth for 2018 at 2.2 percent, driven by extended growth in the agricultural, mining and manufacturing sectors. We also expect the tourism industry to contribute to growth in 2018,” Junior Analyst at the firm, Indileni Nanghonga said.
The NSA in its report last week also noted that on the positive growth sectors, agriculture recorded a robust 12.7 percent growth compared to 1.8 percent recorded in the prior year and this can be attributed to a solid performance from livestock and crop farming subsectors that recorded growths of 13.7 percent and 11.4 percent, respectively.
“The good rainfall especially in the 2nd half of 2017 has resulted in better harvest of crops. In addition, the mining sector recorded growth of 12.8 percent. This is due to better commodity prices coupled with an increase in production. We expect the growth in mining to continue as commodity prices extend the recovery but uranium might suffer due to subdued global uranium prices. Public administration increased but at a slower pace and we attributed the slowdown to government fiscal consolidation. This sector contributed about 12 percent to GDP and the continuous slowdown will keep growth at a slower gear,” Nanghonga said.
On the other hand Private Sector Credit Extensions (PSCE) showed a staggering increase for three consecutive months since the slowing growth to 4.6 percent in November 2017. On an annual basis, PSCE recorded a 5.7 percent growth compared to 8.3 percent recorded in the prior year.
The annual growth was mainly on the back of a 9.0 percent increase in other loans and advance in February 2018 compared to an 8.8 percent in the prior year. Meanwhile, the monthly increase in PSCE by 1.2 percent form 0.4 percent in the prior month was contributed by growth in all categories excluding instalment credit.
Essentially, instalment credit extended its 9 month contraction in February, registering a -4.3 percent y-o-y. Namibia’s total debt stood at N$164.1billion at the end of February, reflecting a y-o-y growth of 8.3 percent compared to 13.6 percent y-o-y in the prior year.
Furthermore, total debt continues to increase on a monthly basis by 1.6 percent compared to a 1.4 percent recorded in January 2018. At the end of March 2018, domestic debt stood at N$48.6 billion, reflecting a 0.9 percent m-o-m growth. This increase was reflected in both Internal Registered Stock (IRS) and Treasury Bills (TBs), which rose by 1.1 percent and 0.7 percent to N$29.1 billion and N$19.5 billion, respectively.
Foreign reserves fell by 5.2 percent to reach N$26.8 billion at the end February 2018. According to Bank of Namibia (BON), the decline in the level of reserves was due to net commercial bank purchases of foreign currency, net government purchases and maturities of foreign currency investments held with the central bank during the period under review.
“South Africa cut its repo rate by 25bps on the 28th of March 2018 on the back of low inflation, a favourable currency and hope from the Moody’s credit review, now upgraded from negative to stable. We reiterate our stance of Namibia to cut interest rates by 25bps and focus on reviving the economy form the current negative economic climate,” Nanghonga noted.
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