42% Major Sectors Reportedly Back To Pre-Pandemic Levels … as risk of economic growth remains

By: Justicia Shipena
Only 42% of major sectors have recovered back to pre-pandemic levels, according to the economists at Simonis Storm Securities.
The Covid-19 pandemic which did not only affect major sectors but livelihoods was recorded in Namibia in March 2019.
The financial research firm recently released its report on the first quarter of 2023.
“Taking stock of our economic recovery since the lockdown induced recession, we observe that only 42% of all the major sectors of our economy have recovered back to pre-pandemic levels,” the report stated.
The report shows that although the Namibian economy has seen growth over the past two years, scope remains.
According to economist Theo Klein, this scope is however not too great a feat to achieve, “given that the sectors which have not recovered to pre-pandemic levels have reached on average 85% of their pre-pandemic levels”.
He added that economic recovery in terms of production or output and jobs has not been broad based or across the different sectors and so we expect income inequality to have worsened.
“Focus from economic policy and regulation should now focus on assisting a recovery in the remaining 58% of sectors which remain below 2019 levels,” the report stated.
According to the latest preliminary national accounts, the Namibian economy expanded preliminary by 4.6% year on year.
This growth was primarily supported by mining with an increase of 21.6%, electricity and water with 10.3%, health with 8.0% and hotels and restaurants with 6.2%.
Simonis Storm said it suspected that households in general would be under pressure due to rising inflation and interest rates, but the data seems to suggest that households in general held up fairly well during these times and increased the quantities in their spending.
In addition, engagements with local food retailers and egg producers indicate that consumers are cutting back on basic food items and that buying power is degrading.
In this light, Klein said they expect consumption spending to be under pressure in 2023.
With the Rand having weakened even further at the start of 2023, thr firm also expects persistent trade deficits to be recorded for the remainder of the year.
The report pointed out that economic growth in 2023 has numerous green shoots which include the private sector green hydrogen pilot projects kicking off, new aquatic projects such as kelp production and salmon farming in Lüderitz, investments in gas pipelines for future gas production, investments in mining exploration and potential lithium production coming online soon, among others.
“Similar to the global situation, inflation is most likely one of the biggest risks to growth. While economic growth rates have improved, we are not convinced that a material reduction in unemployment, especially youth unemployment has been achieved,”the report stated.
However, the economists said they remain of the view that if the government can apply the same amount of energy that they exert on green hydrogen in other sectors of Namibian economy, there can be a material positive change in the economic outlook for the country.
Last year Fitch and Moody’s downgraded Namibia, but both rating agencies maintained their ‘stable’ outlook on Namibia, citing that the country’s governance and institutional framework supports a moderate growth outlook.
Fitch sees the large non-banking sector as supportive to government’s financing flexibility and is balanced against high debt and deficit levels.
“We therefore maintain our view that it is unlikely for Namibia to be downgraded in 2023, owing to the improvement in tax revenue and efficiency gains from tax administration as discussed in our Budget Note report released in February 2023,” Simonis Stormconcluded.