Economy thirsty for some rain and higher commodity prices
An elusive economic rebound is expected in 2020, but recovery is expected to be relatively weak as the agriculture, services and diamond and uranium production sectors are expected to hinder economic growth during the short- to medium term.
Eloise du Plessis, Head of Research at PSG Namibia said while rainfall predictions for the 2020/21 season look promising, the agricultural sector will remain under pressure over the medium term due to depleted livestock numbers that will take years to rebuild and the fishing industry has been rocked by a bribery scandal.
On the diamond and uranium production front, du Plessis noted that growth is expected to moderate in 2019 due to the loss of output at the Elizabeth Bay and Deberas diamond mines, the closure of the Langer Heinrich mine, and industrial action at the Husab uranium mine in the first quarter of 2019.
“Meanwhile, a slowdown in Chinese growth and continued global trade disputes bode ill for exports in general,” du Plessis said.
Meanwhile, du Plessis noted that the services sector will continue to be hamstrung by weaker fiscal expenditure, deteriorating real disposable incomes, and tighter credit conditions, adding tourism is also lagging due to poor regional growth and stricter lending criteria.
“In the medium term, the economy will be supported by continued growth in mining activities as well as the expansion of the country’s port handling, railroad, mobile network, and power generation capacities,” du Plessis said.
PSG has maintained their GDP growth forecast at -1.8% for 2019 and 0.7% for 2020.