By Hilary Mare
THE Bank of Namibia (BoN) has acknowledged that Namibia’s growth outlook is somewhat weaker than earlier anticipated in the February 2018 economic outlook update, with the domestic economy now expected to grow by 0.6 percent in 2018, which is lower than the earlier projection of 1,4 percent.
In the bank’s latest economic outlook report released on Friday, the Central Bank noted that the downward revision in 2018 growth was largely based on realisation that growth in sectors such as uranium mining, hotels and restaurants, government sectors and in taxes on products are likely to be significantly lower than earlier anticipated.
The Bank added that in the uranium subsector, one of the mines ceased production as the international uranium price remained persistently low.
“Risks to domestic growth include a meagre recovery in the country’s trading partners, and a slow recovery in international commodity prices. Weak global demand and slow recovery of international commodity prices, if persisting longer, may slow production or even lead to further mine closures, especially uranium mines. Furthermore, undue volatility of the Namibia Dollar and uncertainty about weather conditions could have adverse effects on growth going forward,” added the Bank.
Despite this, the Namibian economy is expected to recover from a contraction in 2017, largely supported by improved performances for transport and telecommunications, electricity and water and manufacturing.
The domestic economy is projected to grow by 0,6 percent and 1,9 percent during 2018 and 2019, respectively.
“The projected growth for 2018 remains far below the potential growth which is estimated at 4,0 percent. Nevertheless, it represents an improvement from a contraction in real GDP of 0,8 percent for 2017. Better overall growth projected for 2018 is attributed to an improved performance for transport and telecommunications, electricity and water, and manufacturing, coupled with slower contractions for the construction and the wholesale and retail trade sectors. The mining sector is also set to continue supporting the domestic economy, albeit with a less vigorous contribution than in the previous year,” further extended the Bank.
Since the Economic Outlook update in February 2018, the Namibia Statistics Agency (NSA) published the Preliminary National Accounts for 2017 with a slightly sharper contraction for 2017 compared to the Bank’s earlier estimate.
The Bank’s estimate for 2017 was a contraction of 0,6 percent, which turned out to be slightly less severe than the 0,8 percent contraction published by NSA in March 2018. The negative GDP growth in 2017 was mainly due to deeper contractions in construction and wholesale and retail trade.
Growth for primary industries is projected to slow down during 2018, due to the expected lower growth rates across all major primary sectors. After a robust performance in 2017, growth for primary industries is projected to slow down to 6,3 percent in 2018, from 10.7 percent in 2017, before declining further to 1,8 percent in 2019. The expected slowdown during 2018 is reflected in reduced growth rates for most primary sectors, including agriculture, diamond mining and metal ores.
On the other hand, the rate of contraction for the secondary industries is expected to improve in 2018 compared to the previous year. Secondary industries are expected to contract by 2,0 percent in 2018 before recovering to a positive growth rate of 0,3 percent in 2019.
In the tertiary industries, growth is expected to resume from a mild contraction in 2017. The tertiary industries are projected to grow by 1,0 percent in 2018 and by 1,9 percent in 2019, following a contraction of 1,1 percent in 2017.
“The expected recovery during 2018 will come from an improved performance in the transport and communication sector, coupled with a slower contraction in the wholesale and retail trade sector.”
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