Economy remains depressed for 10th consecutive quarter since 2016
The country’s Gross Domestic Product (GDP) recorded a contraction of 0.8% in the third quarter of 2018, keeping economy suppressed for the 10th consecutive quarter since 2016, Namibia Statistics Agency Statistician General, Alex Shimuafeni said at a press conference this week.
Economic growth is expected to be much worse in 2019 as economists have reduced their 2019 GDP forecast to 0.7%. According to Simonis Storms Securities projections, the worse case scenario that could contribute to a further economic depression is the lack of clarity on policies that will put strain of investments; lack of consumer and business confidence to maintain growth; lack of debt discipline; capital flight as the US continues to hike interest rates and low commodity prices.
However, the firm is of the view that the economy has a chance to recover if there is improvement in strategic service infrastructure; rapid state-owned enterprise reforms, improving capital allocations, attracting talent and skills and removal of policy uncertainties in order to win back investors and investor confidence, rent-seeking behaviour is shackled and commodity prices are boomed.
Furthermore, looking at third quarter figures by the Statistics Agency, the inflation rate for November 2018 continues on an upward trend. The annual inflation rate for November 2018 increased to 5.6% up from the 5.2% recorded in the corresponding period of 2017.
Meanwhile, Shimuafeni said that despite signs of positive growth in export data, exports are still being overshadowed by strong imports, which indicates an appetite for consumer spending. In the quarter under review, Namibia recorded a trade deficit amounting to N$3.32 billion, which is an improvement compared to the N$8.37 billion recorded in the same period last year.
“The deficit was mostly attributed to an increase in exports compared to imports that increased at a lower pace. Overall exports grew by 56% whereas imports went up by 16%,” Shimuafeni said.
According to the agency, the main exported commodities were minerals; copper cathodes and diamonds accounted the largest share of total exports of 24% each. The country’s main imports were copper cathodes (15%), mineral fuels and oils(12%), vehicles (8%), boilers and mineral ores (7%). China was Namibia’s major export destination which absorbed N$5.54 billion (23%) of total exports while most imports were sourced from South Africa (N$12.15 billion).