Construction, mining to slow down economy by 4.4%
Namibia’s real GDP growth is projected to slow down by 4.4% during 2016, and this is caused by the decline in growth of the construction sector and the diamond mining sub-sector the Economic Outlook for July 2016 revealed.
This while the real GDP growth is projected at 5.4% in 2017, the Bank of Namibia has revealed. Meanwhile, the projected growth for 2016 represents a slowdown from the preliminary national account estimates of 5.7% for 2015, however, there are notable improvements in the uranium mining sub-sector and a lesser contraction in the agriculture sector but these developments may not be sufficient to avoid a slowdown in overall growth for 2016. Over the medium-term, growth will be supported by increased mining output from new and existing mines, and sustained growth in wholesale & retail trade.
“The 2016 growth is a slowdown from 5.7% in 2015, but it is an improvement from 4.3% projected by the Bank in December 2015. The prevailing drought and projected contraction in diamond mining and construction sectors are expected to negate growth during 2016; however, the negative effects will wane as growth is projected to accelerate in 2017, mainly in line with anticipated recovery in both diamond mining and agriculture as well as improved growth in manufacturing and transport and communication sectors,” Ndangi Katoma, Director of Strategic Communication and Financial Sector Development at Bank of Namibia said.
BoN further stated that over the medium-term, growth is expected to remain strong, supported by increased production from the mining industry and stronger performance from the service industries. This growth will be supported by increased output from both new and existing mines, sustained growth in wholesale and retail and anticipated recovery in agriculture. B2Gold’s Otjikoto mine, Weatherly’s Tschudi copper mine and Swakop Uranium’s Husab mine are expected to increase production towards their optimal capacities. Overall, the main activities in these mines are expected to boost production over the medium term and increase the primary industry’s contribution to domestic growth.
“Risks to the domestic outlook include low commodity prices that may lead to deterioration in the country’s terms of trade and exert pressure on both the current account balance and the international reserves. Electricity supply fears seem to have eased, but Namibia is faced with water shortages, which may further restrain growth in sectors such as construction, beverages, meat processing and agriculture. Increased uncertainties in the South African economy, mainly in the form of low growth and possible changes in credit ratings of the economy are likely to increase exchange rate volatility further with consequential effects on inflation. Furthermore, the persistent drought and adverse weather conditions experienced in the Southern Africa region constitute a major risk to growth in the agricultural sector,” Katoma said.
Growth for the South African economy is expected to slow down to 0.1 percent in 2016 from 1.3% in 2015. The weak growth is explained by low international commodity prices, prevailing drought conditions and low household spending. These economic factors, coupled with domestic political uncertainty are expected to impede economic growth in the medium term. Meanwhile, a marginal recovery of 1.0% is projected in 2017. The Angolan economic growth is projected to slow down to 2.5% in 2016, but to recover marginally to 2.7% in 2017. Growth in Angola is expected to remain subdued, due to the prevailing low oil prices and low rate of economic diversification.
Meanwhile, the global output is expected to remain stagnant in 2016 and to improve during 2017. According to the World Economic Outlook (WEO) update for July 2016, global growth is projected at 3.1% in 2016, which is unchanged from 2015 and projected to increase thereafter to 3.4% in 2017. The higher growth in 2017 is expected to be supported by improved growth among emerging and developing economies. Growth in major emerging markets is slowing, with expected contractions in Brazil and Russia during 2016. In India, growth is projected to slow down to 7.4% in 2016, from 7.6% in 2015 and thereafter remain flat at 7.4% in 2017. Meanwhile, growth is expected to slowdown in China during 2016 and 2017.