Construction industry to remain under pressure
The Construction Sector which drove GDP during 2015 has slowed down significantly according to financial services firm, Simon Storm Securities (SSS).The review follows the recently released statistics of first quarter(1Q2016) GDP data from the Namibia Statistics Agency, (NSA).
“We believe this to be a result of the problems faced by the City of Windhoek due to the water crisis as well as a slowdown in demand in the residential property market,” they added.
According to the released figures, 1Q2016 GDP grew at a much slower pace of 3.5% compared to 7.3% recorded during the same quarter in 2015.Namibia Statistics Agency (NSA) said, slower growth during this quarter can be attributed to slowed growth in the Construction Sector by 0.2% compared to 34.5% 1Q2015.
“The Agricultural Sector remained under pressure, contracting by 12.2% compared to 2.1% in the 1Q2015 and in addition, the Fishing Sector also contracted by 3.5% compared to 8% in the 1Q2015,” the agency said. Meanwhile, Simon Storm Securities (SSS) said the construction industry will remain under pressure as the drought persists.
“The supply of water remains a major challenge in Namibia and has affected other growth sectors such as the Construction Sector. The City of Windhoek have increased their water saving target to 40% compared to 25% required previously. This sector will remain under pressure as the drought persists. Furthermore, sectors that are big consumers of water (construction, manufacturing) will be affected negatively,” SSS noted.
“If the problem is not given the right attention, we expect more industries to move or cut production similar to Namibia Breweries or seek alternative water sources such as private borehole,” SSS added.
Furthermore, they said going forward they expect the rebound in commodity prices to drive growth in the Mining Sector.
“The trade balance during the 1Q2016 narrowed to 4.1 billion Namibian dollars compared to 5.8 billion dollars recorded in 1Q2015 and we expect the trade deficit to narrow from the 39.1 billion recorded in 2015 during 2016,” they added.