Strong GDP growth expected in 1Q 2023
Improved mining activity, recovery in tourism
Namibia's real gross domestic product (GDP) grew by 4.6% in 2022.
The latest high-frequency data suggest that the Namibian economy will record a robust economic expansion on an annual basis in the first quarter of 2023, PSG said.
The strong growth is mainly on the back of increase in mining activity and the ongoing post-pandemic recovery in tourism.
According to PSG, new vehicle sales accelerated by 19.0% year-on-year in the first quarter. Demand for new vehicles is back at pre-pandemic levels despite the recent rise in interest rates. Turning to credit extension, private sector credit extension (PSCE) grew by 3.9% year-on-year in March 2023 compared with a modest expansion of 2.1% year-on-year in March 2022. PSCE growth has not yet recovered to its pre-pandemic pace and also remains well below inflation.
“We expect that higher interest rates and a moderation in economic growth in 2023 will continue to hamper credit demand this year,” PSG pointed out.
In addition, the average bed occupancy index soared by 61.8% year-on-year in the first quarter of 202. Thanks to the reduction in pandemic-related global travel restrictions since early 2022, occupancy in the travel and tourism industry is almost back to pre-pandemic levels.
Moreover, the average mining production index rose by 31.3% year-on-year in the first quarter. Mining output continued to expand at the start of 2023 thanks to increased production across the sector, but most notably in the diamond industry, which was boosted by the arrival of the new Benguela Gem mining vessel in Namibian waters in March 2022, PSG said.
Risks
The Namibia Statistics Agency (NSA) is expected to release the gross domestic product growth figures for the first quarter of 2023 on Thursday, following a 4.6% growth recorded last year.
The Bank of Namibia (BoN) expects the domestic economy to slow down to 3.0% in 2023, on account of slower growth in primary and secondary industries.
The central bank noted that risks to the domestic economic outlook include weakening global economic activity, tightening of monetary policy globally and persistent inflation. In addition, internal risks include water supply disruptions, the looming drought and general infrastructure constraints.
According to the Namibia Statistics Agency, Namibia’s export earnings averaged N$7.8 billion during the first quarter of 2023, while Namibia’s import bill averaged N$10.6 billion in the first three months of 2023.
Looking at interest rates, the Bank of Namibia increased the repo rate by 100 basis points year to date. The repo rate currently stands at 7.75%.
Lastly, inflation averaged 7.1% during the first quarter of 2023, compared to 4.5% recorded over the same period last [email protected]
The strong growth is mainly on the back of increase in mining activity and the ongoing post-pandemic recovery in tourism.
According to PSG, new vehicle sales accelerated by 19.0% year-on-year in the first quarter. Demand for new vehicles is back at pre-pandemic levels despite the recent rise in interest rates. Turning to credit extension, private sector credit extension (PSCE) grew by 3.9% year-on-year in March 2023 compared with a modest expansion of 2.1% year-on-year in March 2022. PSCE growth has not yet recovered to its pre-pandemic pace and also remains well below inflation.
“We expect that higher interest rates and a moderation in economic growth in 2023 will continue to hamper credit demand this year,” PSG pointed out.
In addition, the average bed occupancy index soared by 61.8% year-on-year in the first quarter of 202. Thanks to the reduction in pandemic-related global travel restrictions since early 2022, occupancy in the travel and tourism industry is almost back to pre-pandemic levels.
Moreover, the average mining production index rose by 31.3% year-on-year in the first quarter. Mining output continued to expand at the start of 2023 thanks to increased production across the sector, but most notably in the diamond industry, which was boosted by the arrival of the new Benguela Gem mining vessel in Namibian waters in March 2022, PSG said.
Risks
The Namibia Statistics Agency (NSA) is expected to release the gross domestic product growth figures for the first quarter of 2023 on Thursday, following a 4.6% growth recorded last year.
The Bank of Namibia (BoN) expects the domestic economy to slow down to 3.0% in 2023, on account of slower growth in primary and secondary industries.
The central bank noted that risks to the domestic economic outlook include weakening global economic activity, tightening of monetary policy globally and persistent inflation. In addition, internal risks include water supply disruptions, the looming drought and general infrastructure constraints.
According to the Namibia Statistics Agency, Namibia’s export earnings averaged N$7.8 billion during the first quarter of 2023, while Namibia’s import bill averaged N$10.6 billion in the first three months of 2023.
Looking at interest rates, the Bank of Namibia increased the repo rate by 100 basis points year to date. The repo rate currently stands at 7.75%.
Lastly, inflation averaged 7.1% during the first quarter of 2023, compared to 4.5% recorded over the same period last [email protected]
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