By: Nghiinomenwa Erastus
Estimates are that the Namibian economy will register a 1,5% growth this year, above 2020 production.
If this is to materialise, however, by the end of December (fourth quarter), Namibian factors of production have to produce goods and services valued at N$35,4 billion or more.
This is according to The Villager estimates calculated using the country’s quarterly Real Gross Domestic Product (GDP) as compiled by Namibia Statistics Agency (NSA).
The national account shows that last year (2020), the country produced N$132,5 billion worth of goods and services(real GDP)- on average, at least around N$33,1 billion worth of goods were produced last year except for the third quarter, which was way below average.
So far (three quarters), the country has produced goods and services valued at N$97,1 billion, waiting for the last quarter production figures.
This means that for the country to reach its 2020 pandemic output level or exceed its, the last quarter production should deliver at least N$35,4 billion worth of goods and services or more by year-end.
The fourth quarter is known historically for delivering more outputs and consumption than any other quarter in a year.
Since 2014, the fourth quarter has always produced around N$35-37 billion worth of outputs. However, that stopped last year, when it only managed to contribute N$34,8 billion worth of goods and services.
The expansion of economic activities in the third quarter of 2021 was observed in almost all sectors of the economy, with double-digit growth rates registered in the extractive and hotels and restaurants sectors that recorded growths of 41,9% and 19,5% in real value-added, respectively.
However, the growth in the tourism-related sector will be very difficult to replicate in months like December, with the detection of a new variant that led to the cancellation of bookings as countries put back some of their restrictive measures.
The accommodation industry, which directly feeds on tourism, has seen between 70% and 95% of bookings cancelled for its peak season, which runs from December to January, while new bookings have come to an abrupt halt, as reported last week.
Sectors such as health, ‘agriculture and forestry’, ‘transport and storage’ and ‘Real estate and professional service’ posted strong growth in value-added 7,3%, 5,9%, 5,6%, and 4,2%, respectively.
However, poor performance was observed in the economy’s secondary and some tertiary industries.
The construction sector continued its nosedive, recording the deepest decline of 43,7%, followed by the Financial Services sector registering a reduction of 10,9% in real value-added.
Similarly, manufacturing and ‘wholesale and retail trade’ sectors posted declines of 2,6% and 0,7%, respectively.
The Wholesale and retail trade sector will benefit from high consumption associated with the festive season. However, it could also be said that manufacturing might benefit from alcohol beverage production.
For the construction sector, it has been reported to suffer from crowding out by foreign companies and fiscal consolidation. The status quo is not expected to change in the three last months of the year.
While for the financial service, The Villager analysis could not pinpoint how the sector will gain momentum as people go on holiday and utilise few financial services- with fees and charges hike on the side of the commercial banks, it might recover.
Another observation on the National Account as compiled by NSA, the country’s economy is still driven by final consumption expenditure, contributing N$ 46,1 billion, an expansion from N$43,4 billion recorded in the third quarter of 2020.
The increase in consumption expenditure is mainly reflected in private final consumption expenditure that increased to N$ 34,9 billion during the period under review compared to N$ 31,3 billion estimated in the parallel quarter of 2020.
Meanwhile, government final consumption expenditure in nominal terms was reduced to N$11,3 billion during the third quarter of 2021 in contrast to N$12,1 billion registered in the corresponding quarter of 2020.
This is mainly attributed to the reduction in compensation for employees for the quarter.
It is expected that private consumption will again lead the economy, given the festive fever that drives up consumption, coupled with land preparation for crop farmers.