Uncertainties causing threat to growth projections
Despite low interest rates and easing of the monetary environment to make borrowing attractive, business confidence remains weak.
PHILLEPUS UUSIKU
The Namibian economy is expected to recover returning to pre-recession levels without large sectors falling behind but a lot of uncertainties exist.
According to Indileni Nanghonga, Senior Research and Product Development Officer at Agribank, the Namibian economy is unlikely to return to positive growth as recovery in the labour market will not be rapid, thus still suppressing disposable income and straining demand for non-necessity goods and services.
Consumers are unlikely to stimulate the economy through spending as many lost their jobs due to the pandemic.
She also foresees the vehicle industry as well as the retail sector suffering from low consumer demand.
Nanghonga adds that despite low interest rates and easing of the monetary environment to make borrowing attractive, business confidence remains weak.
The hospitality industry is likely to recover but will remain below pre-Covid-19 levels owing to ongoing travel restrictions.
Government revenue and spending will remain strained in 2021, mainly due to subdued revenue collection. Spending on critical development projects will remain intact. However, investment in new projects might be curbed, she said.
Meanwhile, the mining and agriculture sectors could surprise to the upside due to rising soft and hard commodity demand. Improvements in the global commodity prices coupled with better rainfall could benefit the above-mentioned sectors. Manufacturing will hinge on the positive spill-over from agriculture and mining, she pointed out.
Nanghonga urges businesses to continue strengthening resilience and accelerate transformation in digital customer engagement, operations, technology, risk and sustainable finance.
PRICE MONSTER
Following a rollercoaster ride in 2020, there are fresh hopes for greater stability in commodity prices. Metals and energy prices recovered at the end of 2020, tracking the recovery of the Chinese economy.
Agri commodities rallied in 2020 on the back of a Covid-19 food security stance. Fiscal and monetary stimuli created a flow of money out of sovereign bonds, while an increasing number of investors looked to invest in agricultural commodities, she pointed out.
Agricultural supply chains have shown an incredible resilience in 2020, with only minor delays at certain ports. Agriculture was mostly spared from the global slump in international trade. However, rising food prices have become a concern.
The number of cattle exported declined by 50% to 9 688 in December 2020 from the post-lockdown peak of 19 106 in July 2020. Prices increased by 32% since July 2020 closing at N$42.78/kg in December 2020. While farmers can take advantage of the current high prices to restore income, restocking at high prices presents a risk to future profits in an event of price rebound.
The number of sheep marketed declined by more than 50% to 368 899 in 2020 compared to 741 444 in 2019. Due to significantly low supply of sheep, the price for mutton spiked above N$50/kg at the end of last year, she said.
The impact of the drought over the past 7 years has severely affected the stock count. However, the good rainy reason in 2021 could partially restore confidence.
To revive the sheep and goat industries, good rainfall must be accompanied by policy certainty and farmers’ appetite for farm investment, she [email protected]
The Namibian economy is expected to recover returning to pre-recession levels without large sectors falling behind but a lot of uncertainties exist.
According to Indileni Nanghonga, Senior Research and Product Development Officer at Agribank, the Namibian economy is unlikely to return to positive growth as recovery in the labour market will not be rapid, thus still suppressing disposable income and straining demand for non-necessity goods and services.
Consumers are unlikely to stimulate the economy through spending as many lost their jobs due to the pandemic.
She also foresees the vehicle industry as well as the retail sector suffering from low consumer demand.
Nanghonga adds that despite low interest rates and easing of the monetary environment to make borrowing attractive, business confidence remains weak.
The hospitality industry is likely to recover but will remain below pre-Covid-19 levels owing to ongoing travel restrictions.
Government revenue and spending will remain strained in 2021, mainly due to subdued revenue collection. Spending on critical development projects will remain intact. However, investment in new projects might be curbed, she said.
Meanwhile, the mining and agriculture sectors could surprise to the upside due to rising soft and hard commodity demand. Improvements in the global commodity prices coupled with better rainfall could benefit the above-mentioned sectors. Manufacturing will hinge on the positive spill-over from agriculture and mining, she pointed out.
Nanghonga urges businesses to continue strengthening resilience and accelerate transformation in digital customer engagement, operations, technology, risk and sustainable finance.
PRICE MONSTER
Following a rollercoaster ride in 2020, there are fresh hopes for greater stability in commodity prices. Metals and energy prices recovered at the end of 2020, tracking the recovery of the Chinese economy.
Agri commodities rallied in 2020 on the back of a Covid-19 food security stance. Fiscal and monetary stimuli created a flow of money out of sovereign bonds, while an increasing number of investors looked to invest in agricultural commodities, she pointed out.
Agricultural supply chains have shown an incredible resilience in 2020, with only minor delays at certain ports. Agriculture was mostly spared from the global slump in international trade. However, rising food prices have become a concern.
The number of cattle exported declined by 50% to 9 688 in December 2020 from the post-lockdown peak of 19 106 in July 2020. Prices increased by 32% since July 2020 closing at N$42.78/kg in December 2020. While farmers can take advantage of the current high prices to restore income, restocking at high prices presents a risk to future profits in an event of price rebound.
The number of sheep marketed declined by more than 50% to 368 899 in 2020 compared to 741 444 in 2019. Due to significantly low supply of sheep, the price for mutton spiked above N$50/kg at the end of last year, she said.
The impact of the drought over the past 7 years has severely affected the stock count. However, the good rainy reason in 2021 could partially restore confidence.
To revive the sheep and goat industries, good rainfall must be accompanied by policy certainty and farmers’ appetite for farm investment, she [email protected]
Kommentaar
Republikein
Geen kommentaar is op hierdie artikel gelaat nie