IJG revises economic performance upwards
The growth forecast revisions come after the release of rebased national accounts (base 2010 from base 2004), which rebasing naturally results in marginally higher growth figures for most categories in the National Accounts. moreover, since the release of the previous projections, we have witnessed a number of changes within the local economy that have a material impact on growth, as detailed below said IJG Securities upon releasing a quarterly update of the economy. “A major expansion in the National Budget, increasing planned expenditure for the 2014/15 financial year and a low marginal propensity to save in Namibia suggests that much of this increase will flow into the pockets of local retailers, or be leveraged upon for the purchase of property, vehicles and other consumer goods. We expect to see a strong expansion in both wholesale and retail trade, as well as public administration, both large weightings in the national accounts,” said IJG. A large component of this credit extension covers mortgage loans, while around 15% represents instalment credit increases. This should further contribute to wholesale and retail trade growth added IJG.
A major rebound in agriculture is expected in the National Accounts, on account of base effects. Following a drought in Namibia in 2013, a major sell-off of the national herd was witnessed, and the livestock farming category of the national accounts contracted by a whopping 39.2%. In 2014, we have seen the start of the rebuilding of the national herd, and as a result, some of the lowest cattle marketed numbers in over a decade. We are expecting a rebound in growth, to 28% in real terms. These lower sales figures are expected to impact on meat processing and manufacturing, which is expected to contract by as much as 15% in 2014 IJG said. “We have revised up our construction figures for 2014, despite the vast base set by the 35.2 % growth seen in 2013. This expansion is based on the construction figures that we have seen coming through from the various municipalities to date in 2014, as well as the on-going construction of the three new mines, the major increase in the national budget, and the abnormally large import figures seen for the year to date. As such, we are now looking at growth of 27.3% in 2014, after which we believe growth will slow,” said IJG. “On account of these changes, our growth projections for 2014 have seen a major upward revision, from 5.2% in January, to 6.9%. For 2015, we are looking at growth of 4.5%, largely on account of base effects and a slowing of growth in the categories of wholesale and retail trade and construction, as the high base of 2014 dampens new growth levels,” IJG concluded.