Namibia in a recession
By Magreth Nunuhe
Windhoek – Namibia is in an economic recession. This comes after the country logged a contraction for the second consecutive quarter this year, mainly attributed to the sluggish performance of the construction industry.
The construction industry recorded a decline of 51.9 percent, followed by wholesale and retail trade with a -8.2 percent contraction and fishing -9.8 percent, the National Statistics Agency (NSA) announced.
For the second quarter of 2017, year-on-year, the GDP shrinked by 1.7 percent, while in the first quarter of this year, the GDP also contracted by 2.7 percent.
This means that the country is in a recession because the economy shrunk for two consecutive quarters.
The poor performance was exacerbated by government budget cuts, which saw many service providers, especially in the construction industry not being paid on time by government.
Outstanding invoices amounting to R$2.1 billion impacted on many service providers doing business with government, which the latter promised to fully pay in a fast-tracked manner by the end of August 2017
“The poor performance in the (construction) sector is mainly attributed to the real value of government expenditure on construction which registered a contraction of 83.3 percent compared to an increase of 6.1 percent recorded in the same period in 2016,” said the NSA.
When it comes to the wholesale and retail trade, the sector’s decline by -2.3 percent was mainly attributed to the supermarket, furniture’s and vehicles sales, which recorded negative growths.
Fishing, which also took a slump this year of -9.8 percent, mainly reflected in mid-water fisheries landings recording a decline of 13.2 percent, compared to a strong growth of 8.4 percent in same quarter in 2016.
Namibian GDP growth was expected to increase from an estimated 1.3 percent in 2016 to 2.5 percent in 2017 and 3.7 percent in 2018, driven by recovery in primary industries such as the mining sector, agricultural subsector as drought conditions subsides, sustained growth for the tertiary services sector and continued robust growth in the tourism sector.
On the positive side, the agriculture and forestry sector grew by a strong 17 percent during the second quarter of 2017, compared to a 6.9 percent observed in 2016.
The recovery was due to the good rains received, which saw an increase in crop farming and real valued added in the livestock subsector.
“Cattle exported live to South Africa and Angola slowed to 8.9 percent during the quarter under review,” said NSA.
Mining and quarrying sector also registered a strong growth of 25.8 percent, which was mainly attributed to the growth in diamond, metal ores, uranium and other mining and quarrying.
Diamond mining especially recorded the strongest growth of 33.2 percent compared to a decline of 30 percent a year ago.
In addition, manufacturing also recorded a growth of 2.9 percent, which was mainly attributed to increases in the beverages industry and basic non-ferrous metals.
Even though these sectors have recovered excellent growths as expected, according to NSA statistics, the GDP continues to decline.
For the most part of 2016, Namibia was in a slump when its budget deficit almost reached an all-time high of 9.1 percent of GDP and debt escalated to approximately 46 percent of GDP.
This was exacerbated by poor growth, descending from 5.7 percent in 2015 to 1.3 percent in 2016 as a result of a decrease in commodity prices and drought distressing large sections of the economy, including agriculture and construction.
Meanwhile, Namibia’s export and import of commodities recorded a deficit of R$6,194 million in the second quarter of 2017, which saw the total export and import commodities registered at R$13 920 million and R$20,113 million, respectively.
Namibia’s export key markets were South Africa, Switzerland, Botswana, Spain and Belgium, which made up 61.3 percent of the total export revenue.
Namibia mainly imported its goods from South Africa, Botswana, Bulgaria, Zambia and China, making up 79.8 percent of the total import.
The top export products were diamonds, copper ores, fish, copper cathodes and live animals, while the top import products were mineral fuels and oils, vehicles, boilers, diamonds and electrical machinery and equipment.
In terms of trade by economic regions, the Southern African Customs Union (SACU) remained the dominant export market for Namibia for the period under review, while the European Union (EU) was Namibia’s second largest export market.
The European Free Trade (EFTA) came in third as the largest export market for Namibia’s economy.