Namibian economy promises a good future

NDAMA NAKASHOLEThe Bank of Namibia (BoN)’s July 2018 Economic Outlook update released on Friday reveal that Namibia’s real GDP growth is projected to recover to 0.6% in 2018 before improving to 1.9% in 2019. These growth projections are an improvement compared to a 0.8% contraction in 2017.THE DRIVEThe expected recovery in 2018 is mainly due to projected improvements in transport and communications, electricity and water and manufacturing coupled with slower contractions for the construction and the wholesale and retail trade sectors.BoN says that the mining sector is also set to continue supporting the domestic economy although with less strength that it did in the previous year. In 2019 and beyond, GDP growth will be supported by the good performance of uranium mining and improvements in the construction and wholesale and retail trade sectors.RISKSDespite the expected growth, Namibia’s domestic economic growth still faces risks and those include the slow recovery of the country’s trading partners as well as low uranium prices.“Weak global demand and a slow recovery of international commodity prices, if persisting longer, may slow production or even lead to further mine closures, especially uranium mines,” BoN says.Furthermore, undue volatility of the Namibia dollar and uncertainty about weather conditions could have adverse effects on the country’s economic growth, going forward.GLOBAL PERSPECTIVEAlthough Namibia’s economy is expected to grow, it is below the global economy as a whole which is expected to improve during 2018. According to the International Monetary Fund (IMF)’s World Economic Outlook of April 2018, the global economic growth is expected to continue its upward drive to reach 3.9% in both 2018 and 2019 after strengthening to 3.8% in 2017.The projected improvement in global growth will be supported by favourable market sentiment, accommodative financial conditions together with international spin-offs from expansionary fiscal policy in the United States.In the Sub-Saharan Africa region, growth came out at 2.8% in 2017 and is projected to rise during 2018 and 2019 to 3.4 and 3.7%, respectively, as the outlook for commodity-exporting economies improves. The projected improvement in the global economic growth may have positive spill overs for the Namibian economy, BoN says.WIDER RISKSRisks to the short term global economic outlook are largely balanced according to the Friday’s update.On the upside, the continuing recovery in investment could nurture a rebound in productivity, implying higher potential growth in the period ahead. In turn, a spurt in potential output might expand the scope for demand to rise before it hits capacity constraints and generates inflationary pressures, says BoN.“Downward risks to growth include a worsening of trade tensions and the imposition of barriers to cross-border trade, which not only have a direct negative impact on economic activity but also weaken confidence. Furthermore, a possible accumulation of financial vulnerabilities and erosion of support for global economic integration that could spur an inward shift in policies remain risks, together with a host of non-economic risks, including geopolitical worries and climate shocks.”

Namibian economy promises a good future

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Namibian economy promises a good future

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