Bank’s house view on budget rests on improved 2018 economic performance
“Namibia’s economic growth outlook for 2018 looks positive and we can remain cautiously optimistic” commented Standard Bank’s in-house economist, Naufiku Hamunime, in anticipation of the tabling of the 2018 Appropriation Bill on 07 March by the Minister of Finance, hon Calle Schlettwein.
Quoting the Bank of Namibia outlook, Hamunime said real economic growth for 2018 and 2018 is pencilled in at 2.2% and 3.1% respectively, with a view that it will continue to accelerate over the medium term.
Following the 2016 economic slowdown the country’s Gross Domestic Product (GDP) growth slowed to 1.1% as a result of low commodity prices, construction slowdown, reduced SACU revenue, the Angolan retail crisis, reduced government spending and the pervasive drought.
Expected growth for 2017 currently stands at a paltry 0.6%, constituting a severe downward revision from the Bank of Namibia’s earlier 2.1% growth forecast.
“This minimal growth experienced last year reflects deeper than previously expected contractions in the construction, wholesale and retail trade sectors, in as well as slower than expected growth rates for manufacturing, electricity and water and the public sector,” said Hamunime.
Citing positive developments during 2017, Hamunime noted that the primary sector performed quite well largely on the back of a recovery in both agriculture and mining. “Last year we saw growth in the agriculture sector increase to 8.1% as a result of normalising rainfall patterns.
“However growth in the sector is expected to moderate in 2018 and 2019 due to uncertain weather conditions. The fishing sector felt contraction and a slight recovery. There’s also been strong recovery in the mining and quarrying sectors largely as a result of increased diamond mining. Going forward uranium mining is expected to increase, however the effects of this will be somewhat muted by subdued uranium prices. This coupled with the expected slowdown in diamond mining is expected to result in moderate growth in the mining sector,” said Hamunime.
She stated that growth in the construction sector will generally remain depressed following the completion of major projects in the mining sector and ongoing fiscal consolidation by the government.
Hamunime concluded that the government has been making moves to improve the economy through strong fiscal policies and a concerted drive to reform under-performing State Owned Enterprises. She said commendable efforts have also been made to stabilize the fiscus, while continuing to invest in productive assets through the establishment of the Infrastructure Fund with an allocation from the the African Development Bank loan.