BoN downgrades GDP growth for 2011
Months after revealing that it will be revising downwards its GDP estimate for 2011, the Bank of Namibia finally announced on Wednesday that it has downgraded its estimate of GDP growth in the local economy to 3.8% last year down from an initial projection of 4.1%.
Announcing the downward revision, governor Ipumbu Shiimi said the performance of the real sector was frail during 2011, driven by weaknesses in the primary sector particularly the mining sub-sector. He said as a result of these developments, economic growth in Namibia is estimated to have slowed to 3.8% in 2011 from 6.6% in 2010.
“The slowed growth reflects weaknesses in the mining sector, which incurred production losses due to prolonged industrial actions, flooding at the mines and logistical constrains,” the governor said.
After contributing 8.8% to GDP in 2010, the mining sector was expected to spur economic growth last year after the world economy recovered from the worst economic crisis in decades but the worst floods in recent history and production losses at the country’s two major mines, Namdeb and Rossing after crippling strikes that lasted weeks, and delays in the development of uranium projects means the mining sector’s contribution to GDP will be minimal.
But despite the slowed growth in the primary sector, Shiimi was upbeat about the growth prospects in other sectors particularly in the construction, wholesale and retail trade, tourism, communications and transport sector, which he said recorded positive growth.
Meanwhile, the central bank has left the repo rate unchanged at 6.00% sighting uncertainties and slow growth in the global economy.
The repo rate was last changed in December 2010.
Governor Shiimi said the sovereign debt concerns, high unemployment rates and stagnant income growth in the global economy continue to suppress business and consumer confidence, going forward. He said given the trade linkages and openness of the Namibian economy to the global economy, the elevated risks to global growth have consequences for the domestic economy.
“In view of the need to ensure a sustained growth in the domestic economy, the MPC is of the view that a tightening of the monetary policy stance at this stage might be premature and thus detrimental to the growth prospects. In light of the above, the MPC (Monetary Policy committee) decided o leave the repo rate unchanged at 6.00%.”