Slowdown in GDP growth not as bad as indicated earlier
With the release of the final National Accounts on Thursday, it transpired that the preliminary estimated GDP growth for 2016, released in March this year, was considerably more pessimistic than the picture emerging this week.
Statistician General, Mr Alex Shimuafeni said in the statement accompanying the release of the accounts, that economic growth for 2016 was 0.9 percentage points higher than earlier estimates. It is now clear that the economy did not contract during 2016 but grew by 1.1% compared to 2015.
While this indicates an economic performance vastly inferior to output potential, it at least shows the economy has not shrunk, only the rate at which it grows year on year has stalled. As comparable growth benchmarks, Shimuafeni quoted the 2015 growth rate of 6% and the 2014 rate of 6.4%.
More support for the notion that the economy’s growth potential is far higher than reflected by official statistics come from the fact that preliminary quarterly figures indicate contractions during both the third and the fourth quarters of 2016. For the full year to register a small growth, the first two quarters had to post higher growth rates.
The positive adjustments to the 2016 GDP growth rate stems mainly from the sub-sectors, Hotels & Restaurants (+3.7%), Construction (+3%), Electricity and Water (+2.4%), Manufacturing (+2.2%), Education (+1.7%) and Public Administration and Defence (+1.3%). Other minor improvements came from Agriculture & Forestry, Mining & Quarrying, Transport & Communication, and Financial Intermediation.
Slight deterioration between the estimates and the actual figures was posted by Real Estate & Business Services (-0.3%), Community, Social and Personal Services (-0.2%) and Private Households (-2%). The net effect between positive and negative adjustments improved the GDP print by 0.9 percentage points.
Shimuafeni said revisions in the National Accounts are always necessary because certain data only becomes available more than a year after the end of the reference period.
Singling out the industries that suffered most from the stalled economy, he said the Secondary Sector contracted by 7.8% and the Tertiary Sector posted a final growth rate of only 3.9%.
Construction which is listed as a secondary industry was the biggest contributor to the decline in the Secondary Sector, contracting by 26.5% in 2016. However, the actual contraction was less than the earlier estimate of -29.5%. As a comparison, in 2015 construction expanded by 26% compared to 2014.
The main culprit for the dramatic plunge in construction activity stems from government projects. The real value for construction works by the government slowed to 5.6% in 2016 from a growth of 31% recorded in 2015” stated Shimuafeni.
Slowdowns in both agriculture and mining also contributed to the dismal growth rate albeit it not as severe as the earlier estimates, and somewhat better than 2015.
“The primary industries have recovered but they however remain in a contraction, registering a decline in real value added of 2% in 2016 compared to 5.2% in 2015.”
The forced marketing of livestock during 2016 as a result of the drought is amply reflected by the statistics. Livestock marketing grew by 2.3% in 2016 compared to 2015.
Commenting on the revisions, the Executive Director of the Economics Association of Namibia, Mr Klaus Schade, said “Economic growth surpassed expectations for 2016 since quarterly GDP data recorded negative growth rates for three of the four quarters. However, it remained below the 1.3 percent anticipated in the budget statement.”
The Namibian National Accounts are compiled in line with international standards, the System of National Accounts 1993 (SNA93) as set by the United Nations. In Namibia, a comprehensive set of accounts are released twice a year namely the preliminary estimates released in March of each year and the annual (revised) estimates released in August of each year” concluded Shimuafeni.