Economic rebound pencilled in but construction still stuck in a rut
A leading international research company expects Namibian uranium output to jump by 80% this year on the back of the ramp-up to full production of the Husab Mine.
BMI Research, a unit in the Fitch Group, said in its latest assessment of the Namibian economy, Husab is expected to reach maximum output by August this year after completing a labour process which will take subcontracted employees to permanent status. Once at full production, the Husab mine will be the world’s second largest uranium mine by volume output.
BMI’s analysis was released last week Thursday on 04 January 2018.
Noting three successive quarters of contraction during 2017, BMI said it now expects the Namibian economy to expand strongly in 2018, pencilling in an expected real growth rate of 3.5% for 2018 and 4.7% for 2019. However, their expectation for the next five years is more subdued with a forecast average growth of only 2.5%, well below the average 3.7% of the preceding five years.
The economic counterweight however, remains the construction sector for which BMI expects prospects to remain bleak. “While we see a brighter growth outlook ahead, sluggish infrastructure sector activity will present multi-year economic headwinds. Indeed, the delay in the award of tenders for several projects will not only put some near-term downward pressure on construction activity, but also weigh on long-term efforts to improve logistics and the business environment.”
“The construction sector is likely to remain sluggish over a multi-year time horizon, weighing on real GDP growth in the long term. The sector contracted by an average of 42.5% y-o-y in the first three quarters of 2017, and although investors are discussing the start of some infrastructure projects in the coming quarters , political and regulatory challenges are likely to slow their implementation,” according to the researchers.
BMI also holds a reasonably positive view of agriculture but recognises that much of this sector’s fortunes depends on climate which is beyond the control of policy. Despite agriculture contracting slightly in 2017, it is expected to continue to improve its performance boosted by structural improvements in financing and production.
“The African Development Bank has recently extended a ZAR1 billion loan to the Agricultural Mechanisation and Seed Improvement Project (NAMSIP), which will support Namibian farmers’ efforts to increase mechanisation and seed systems development, increasing agricultural production and productivity over a multi-year time horizon,” stated BMI.