The High-Level Panel on the Namibian economy forecasts that the domestic economy could recover in the next 12 months.
The 22-member panel which draws its expertise from different fields including business, however, warned external shocks in the global economy could become a threat to the forecasted recovery.
Hanan Morsy, Director of the African Development Bank’s (AfDB) macroeconomic policy department was quoted recently by South African media forecasting that the persisting trade tension between the US and China could shave 0.7 percent from Africa’s GDP this year.
The AfDB Economic Outlook 2019 report notes that a slowdown in the global economy could lead to a decline in demand for Africa’s exports, of more than 60 percent of which head to the US, China and Europe
“We apply ourselves, consult key stakeholders, conduct research and do best practice benchmarking in coming up with proposals to grow the economy. Our proposals are evidence-based and practical. We are confident that we’ll get out of this within the next 12 months,” panel chairperson, Johannes Gawaxab told the Windhoek Observer without giving figures.
“The biggest imponderable is a possible global recession on the back of the China-US trade war, geo-political tensions and potential contraction of European economies which could have dire consequences for the continent including Namibia. The sad reality is that we have very little control over those developments.”
Gawaxab said some policy reforms will be key towards the ability of the country to attract investment, which in turn will spur economic growth.
“The focus areas for the next phase include reforms needed to drive inclusive economic growth, create jobs and to assist SME’s to become a key driver in turning around our economic fortunes. This is a journey and we must move away from consumption to investment spending, increase productivity of the economy, avoid a ratings downgrade and work towards balancing the elusive economic trinity. Improving our competitiveness and ease of doing business will also feature prominently,” he said.
The Bank of Namibia on Tuesday also warned that trade tensions between the US and China could impact on demand of Namibia’s minerals.
This comes as it expects the domestic economy to fall into a deeper contraction of 1.7 percent during 2019, down from its initial estimate of 0.3 percent positive growth in April.
The central bank said the economy is expected to recover to positive growth of 0.8 percent and 1.2 percent in 2020 and 2021, respectively.
The projected 1.7 percent contraction represents a further deterioration from a mild contraction of 0.1 percent in 2018, according to preliminary estimates by the Namibia Statistics Agency.
The bank said the expected deeper contraction during 2019 would be in line with a devastating drought now afflicting the country as well as anticipated contractions in major sectors such as diamond mining and wholesale and retail trade.
A likely reduced contraction in the construction sector would ease the drag on overall growth when compared to the last two years, but its impact will be offset by weaknesses in other sectors during 2019, it said.
The bank recently cut its benchmark interest rate for the first time in two years as part of efforts to boost the economy which has already suffered two years of negative growth, a first since independence from South Africa in 1990.