AFTER experiencing negative growth over the last 10 quarters, the Namibian economy is expected to rebound in 2019, going forward.
The Bank of Namibia (BoN) said in their economic outlook report for December 2018 that despite economic challenges, they are expecting the economy to recover to a positive growth rate of 1,5% in 2019 from a contraction of 0,2% in 2018.
The central bank observed that the main risks to domestic growth include a weak recovery in the country’s trading partners, and a slow recovery in international commodity prices, particularly for uranium.
According to the BoN, if Namibia was to encounter a slow demand for minerals from their trading partners such as China or France, then the country’s projected growth will be at risk, especially for the primary industry.
Based on the BoN’s predictions, the growth for the primary industry is expected to massively decline from 8,3% in 2018 to 0,7% in 2019.
However, overall growth in the secondary industry is expected to slightly improve to 2,2% in 2019 from 0,3% in 2018.
The tertiary industry has incurred negative growth of 1,4% in 2017 and 1,5% in 2018. However, the bank predicts that in 2019, the industry will incur a positive growth rate of 1,8%.
The slower growth in the primary industry is a result of the closure of one mine in the diamond sector. Growth for uranium is also expected to slow to 3,6% in 2019.
“Growth for the agricultural sector is expected to stabilise around 4% in 2019 and 2020,” the BoN stated.
Although the fishing industry was estimated to contract by 4,7% towards the fourth quarter of 2018, the central bank is expecting it to grow moderately by 1,4% in 2019.
Growth forecasts for the secondary industry are expected to expand by 2,2% in 2019 from 0,3% in 2018, from severe contractions of 6,7% in 2017 and 6,4% in 2016, respectively.
“The projected recovery in the secondary industries is expected to originate from an improved growth in manufacturing and lesser contractions in the construction sector,” the bank said.
Furthermore, the manufacturing sector is expected to expand further by 2,3% from growth rates of 1,7% and 1,3% in 2018 and 2017, respectively.
This expansion in 2019 would be supported mainly by grain mill products and beverages.
The electricity and water sector, on the other hand, is expected to decline slightly in 2019. However, construction is projected to gradually improve to a positive growth rate of 1,6% in 2019 from a contraction of 5,2% in 2018.
Even though the bank predicted the tertiary industry to incur positive growth of 0,3% in the economic outlook report of July 2018, the outcome is that the industry was projected to have contracted by 1,5% by the last quarter of 2018.
“The downward revision was mainly based on weak outcomes in sectors such as wholesale and retail trade, real estate and business services, transport and communication as well as the public sector,” the Bank of Namibia said.
Simonis Storm Securities said in their economic outlook for 2019 that although these sectors have experienced slower growth in 2018, they are expected to improve in 2019.
They added that despite adverse global developments which occurred in 2018, the local mining sector outlook for growth remains strong, with the real gross domestic product to grow by 1,1% in 2019.
A research associate at the Economic Association of Namibia, Klaus Schade told The Namibian that high production levels at the Husab mine would also benefit the mining sector to some degree in 2019.
Another economist, Mally Likukela, observed that 2019 will be less hard than 2018 as economic agents have found ways to survive and keep afloat.
He added that positive growth in Namibia’s trading partners would boost the local economy, and the usual economic activities that spring to life in the election build-up will spur the economy to some extent.
“Getting out of the woods will take longer, mainly because the balance sheets of most corporations and individuals were shattered severely, and the deeper-than-expected impact of the fiscal consolidation will further slow down the recovery process,” Likukela said.
He added that the growth rate would most probably remain flat, and inflation would hover around 5%.
Recovery in the international prices of commodities could help the mining sector, but the looming drought will work against it, he noted.