The construction, hotel and restaurant sectors are expected to drive the domestic economy recovery in 2019, with the country’s GDP projected to grow by 0,3 percent, latest figures from the Bank of Namibia show.
The announcement by the central bank is a downward revision from its initial projects of 1.5 percent growth figure announced in 2018.
“More information about economic activities in 2019 is now available and it is now clear that the growth estimates for diamonds, uranium and metal ores are lower than what was anticipated in the December update,” BoN Director for Strategic Communication and Financial Sector Development, Emma Haiyambo said.
Although the country’s fortunes are projected to improve further in 2020 with an estimated 1.9 percent economic growth rate, low rainfall and persistently low uranium prices pose a threat.
“The low uranium price increases uncertainty about expected production from uranium mines, while the erratic rainfall may continue to negatively affect the performance of the agricultural sector beyond 2019.Furher more, the China/US trade tensions may negatively affect the demand for Namibian minerals,’ she said.
This comes as Ratings agency Fitch has forecasted economic growth to reach 1.2 percent in 2019.
“We at Fitch Solutions forecast Namibia’s mining sector to continue seeing strong growth as uranium production ramps up, providing tailwinds to the broader economy and leading real GDP growth to accelerate from -0.1 percent in 2018 to 1.2 percent over 2019. However, prevailing weakness in other sectors such as construction and agriculture will keep the economic recovery relatively muted over coming quarters, with growth remaining below the 2010-2016 average of 5.1 percent.”
According government figures as presented in the recently tabled budget, GDP growth for 2019 could reach up to 1.0 percent, from a contraction of between 0.2 and 0.5 in 2018.
“In a baseline scenario, if no policy measures are implemented, GDP growth is estimated at 0.2 percent in 2019 and improve to approximately 1 percent by 2021. However, the outlook could improve to approximately 1.2 percent this year and reach 2.2 percent in 2020 if it is supported by timely implementation of supportive policy measures,” Finance minister, Calle Schlettwein said.
“At this economic recovery rate, the imperative to speed-up implementation capacity and eliminate bureaucratic delays for the outlook to translate into per capita income expansion is critical.”
Government has, however, banked on the mining sector to drive the country’s economic growth for 2019.
“On the demand side, the recovery is expected to be led by increased exports from the mining sector, increased investment in public infrastructure and a soft recovery in aggregate consumption expenditure. With aggregate public spending generally flat, private investment inflows are necessary to lift the growth potential of the economy.”
“From the sectors of industry, recovery is expected to be anchored by increased output from the mining sector, especially the uptick in uranium output. The primary industry is estimated to grow by 3.1 percent in 2019 and average around 2 percent over the MTEF.”
Based on government figures, intensity of the recession has eased from -0.9 percent in 2017, to an estimate of between -0.5 to -0.2 percent in 2018.
“This would indicate that the recession has almost bottomed out and points to the economy recovering to positive GDP growth territory this year and over the MTEF,” the Finance minister said.
The growth outlook for the Sub-Saharan African Region is projected to firm up to 3.3 percent in 2019, from 2.7 and 1.4 percent in 2017 and 2016 respectively.
Growth for neighboring South Africa is expected to improve to 1.5 percent in 2019 and 2.1 by 2021, while Angola’s growth rate is estimated at 2.4 percent for 2019, strengthening to 3.2 percent next year as the pass-through effects of oil price take hold.