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It’s almost dawn for ailing local economy- IPPR

by Kelvin Chiringa

After a lengthy difficult phase of economic darkness, signs are that it is almost dawn of recovery for the ailing local economy and this has been reinforced by the Economic Watch which has reported that indeed there are signs of recovery. 

Says the Institute for Public Policy research in its latest Economic Watch, “Initial data for the first quarter 2018 indicates an economic contraction of 0.1% on a year-on-year basis,  which is slightly better than the decline by 0.4% during the first quarter 2017  and contractions of 1.1% and 1.5% in the third and fourth quarters of 2017 respectively.”

The IPPR has taken notice of positive developments (23.7% growth) in the construction sector which had collapsed on a quarterly basis in the last two years.

IPPR advises that the strong growth needs to be seen against a low base in 2017 due to continuous declines in value added.

“Real value addition of the construction sector amounted to N$1 289 million, which remains one of the lowest since 2013 with the exception of 2017. Value addition in the mining sector expanded by 4.7%, which together with the performance of the construction sector, has benefited the transport sector that grew by 2.5%.”

“The manufacturing sector contracted by 2.1% mainly caused by a decline in the processing of non-metallic minerals and base metals. Below average rainfall in the first quarter of the year resulted not only in a strong increase of live animals being exported, but also an increase in meat processing (growth of 11.2%). Value addition in the hotel and restaurant sector dropped by 5.3%,” says the IPPR report.

Green flags on the oil side have also come under the radar coming from a period of steady declines starting in the second half of 2014.

IPPR notes that indeed oil prices have begun to rebound since the second half of 2017.

“Oil prices dropped from a quarterly average of US$109.69/barrel (bbl.) for crude Brent oil in the second quarter of 2014 to a low of USD33.84 / bbl during the first quarter of 2016 where after prices recovered, but remained below USD50.00 /bbl. for the rest of 2016. Prices passed the USD50.00/bbl. mark in August 2017 and briefly touched the USD80.00/bbl. mark in the second half of May 2018.”

“Since then prices have weakened slightly and closed the second quarter 2018 on an average of USD74.53/bbl. – the highest quarterly average since the first quarter of 2014. Average quarterly oil prices increased by between 5.1% and 17.9% on a quarter-to-quarter basis since the second half of 2017 and by between 13.8% and 50.4% on a year-on-year basis.”