Domestic Economy projected to slowdown- BON
Namibia’s real gross domestic product growth is projected to slow down to 2.5% in 2016, before accelerating to 4.0% in 2017, the Bank of Namibia (BoN) revealed on Thursday.
The central bank released the November 2016 Economic Outlook Update which showed that the projected growth rates represent a slowdown from the national accounts estimate of 5.3% for 2015.
“This contraction is mainly attributed to a projected decline in construction, diamond mining sub-sector, electricity and water sector and the planned reduction in government expenditure. Over the medium-term, growth will mainly be supported by anticipated recovery in both agriculture and diamond mining as well as improved growth in uranium mining, manufacturing, and transport and communication sectors,” said Emma Haiyambo, Director: Strategic Communication and Financial Sector Development at BoN.
Meanwhile, good growth prospects are expected from metal ores mining (copper and gold), uranium mining, as well as, wholesale and retail sector; and thus these sectors are expected to sustain growth at 2.5% in 2016.
Haiyambo further stated that the risks to the domestic growth outlook remains while being centred on both global and regional spill-overs and the prevailing drought.
“The weak global demand, emanating from slower growth in advanced economies and major emerging market economies, coupled with slow recovery of international commodity prices, may slow production at some of the local mines, especially uranium mines,” she said.
She added that at the regional level, drought poses an immediate threat to production in primary industries and to food inflation. Namibia is faced with water shortages, which may further restrain growth in sectors such as construction, beverages, meat processing and agriculture.
The central bank also stated that the global growth remains weak for the remainder of 2016, with an upside growth in 2017. According to International Monetary Fund’s World Economic Outlook for October 2016, the global economy is expected to grow by 3.1% and 3.4% during 2016 and 2017, respectively.
“Largely, global growth is expected to increase marginally in key emerging markets and developing economies, during 2016 and 2017 compared to the growth realised in 2015. In contrast, growth is expected to slow down in major advanced economies over the same period, but with a notable projected recovery in the United States during 2017,” Haiyambo said.
Growth in the Sub-Saharan Africa region is expected to slow down to 1.4% in 2016 before recovering to 2.9% in 2017. Haiyambo further said that the expected slowdown in the area is attributed to low commodity prices, low consumer spending, subdued investors’ confidence and the sever impact of the persistent drought in the region.