Expansion in mining, manufacturing activity will support job creation and wage growth, driving expansion in the retail sector- Research firm
Fitch Solutions Macro Research expects the expansion in the manufacturing and mining sectors to lead to job creation and wage growth, leading to the recovery of the local economy this year.
In its latest Industry Trend report, Fitch Solutions expects Namibia to emerge from recession in 2019 due to stronger mining production, after weaker than anticipated growth in 2018. The agency forecast real GDP to average 2.1% over 2019 -2023.
According to the report, the ramp up in uranium production at the Swakop Uranium owned Husab mine following a series of delays to achieving full production will provide a key boost to overall economic activity in 2019. A further boost to economic activity will come from the manufacturing sector, driven by higher production of grain mill products and beverages.
“Expansion in mining activity and manufacturing will support job creation and wage growth, driving expansion in the retail sector in 2019. Job losses in primary and secondary sectors of mining, construction and manufacturing have had a direct adverse impact on wholes ale and retail trade over recent years, as higher unemployment has weighed heavily on consumer demand. We therefore expect the improvement in the mining sector to help consumer-facing sectors return to growth in 2019,” the report stated.
The report further showed that it will be a gradual recovery for consumers however, as unemployment remains elevated (34% in 2018), capping scope for substantial income gains, while inflation is ticking higher, which will also weigh on consumer spending power in 2019.
“The long -term outlook is brig ht. Namibia’s retail market is one of the mos t developed in the Sub-Saharan Africa region, though it continues to lag behind that of South Africa. There are numerous modern retail spaces available in Namibia, primarily located in the capital Windhoek. While the population is currently relatively dispersed, creating operational challenges for retailers the Namibian market will continue to benefit from a rapid rate of urbanisation, which will make more of the potential consumer base accessible,” the report added.