Experts revise growth forecasts from bad to worse
Demotivated by the weak economic growth numbers in the first quarter of this year, experts have revised the overall growth forecast from bad to worse.
PSG Wealth Management Namibia, a firm that tracks developments in the economy, has said it has toned down on its excitement in the economy and now expects it to grow by a measly 0.9% for 2018.
PSG has farther slashed its forecast for 2019 and 2020 to 2.3% and 3.6% respectively.
The firm has stressed that “Risks are skewed to the downside in the short run due to the uncertainty of the effects of the global trade war, the Emerging Market debt crises in Turkey and Argentina, Brexit and the trajectory of oil prices”.
These revisions are due to the overall global economic activity which has been slightly weak while non-fuel commodity prices declined.
Therefore, PSG expects exports of raw and processed minerals to be weaker than earlier expected, especially uranium exports – since the Langer Heinrich mine was mothballed and the optimisation of the Husab mine has lagged.
Copper exports are also expected to disappoint due to the Tschudi mine’s operational issues, the experts have warned.
A renewed weakness in the Namibian dollar continued weak demand, more job losses, as well as rising fuel prices and municipality tariffs, have also reduced expectations for consumer spending.
On the construction front, the ongoing fiscal consolidation, pressured by the prospect of lower revenues, also inhibits the construction industry and the services sector in general, said PSG.
PSG further expects the current account deficit to widen slightly during 2018, due to higher fuel import costs, a modest recovery in import volumes due to improved somewhat consumer spending and lower Sacu revenues, which will only be partly offset by increased goods exports.
“We expect the current account to widen to 3.6% of GDP in 2018 from 3.4% of GDP in 2017,” the firm said.
Meanwhile, the firm observed that the recession continues to drag on as specific industries such as retail, manufacturing, utilities and fishing continue to underperform.