It’s been 5 consecutive quarters now that
Namibia has struggled in the grip of subnormal GDP growth. The figures released
by the Namibia Statistics Agency a few weeks ago confirms that fact, but
luckily shows some signs of abatement. Nevertheless, with the reveal that
Namibia showed a contraction of 1.7% of GDP during the second quarter of the
year, we still need to examine the data carefully. Let’s examine the report
that Statistician-General Alex Shimuafeni released.
To start off, let us examine the effect
inflation has had on our country. After peaking at 6% during 2014, inflation
consistently dropped on a year-to year basis until Quarter 2 of 2015, when it
reached a low of 3%. Afterwards, it remained within the 3% to 3.5% range until
the first quarter of 2016, when it shot up to 6%. Since then, it has climbed
quarter to quarter, peaking in the first quarter of this year at 7.7%, before
dropping by the second quarter to 6.3%. The good news is that inflation seems
to be on a downward trend, having dropped to 5.4% by August already.
So let’s take a look at the different
economic sectors before taking an overall view. The Agriculture and Forestry
sector is a highlight for this quarter, as it managed strong growth of 17%.
This is as a result of good rainfall, which saw an increase in crop farming
(and in cereal production specifically) and resulted in the crop farming
subsector posting 32% growth. Livestock farming also didn’t disappoint, with
growth of 12.5%, while abattoirs and butchers recorded a turnaround, showing
growth of 3.9% after having posted declines in the previous quarter. The Fishing sector, however, did not do as
well, recording a contraction of 9.8%, down from growth of 4.6% during the
first quarter.
Mining and Quarrying, fortunately, showed strong
growth of 25.8% during the quarter, with all subsectors showing growth. In
particular, the diamond subsector grew by 33.2%, due to an increase in carats
produced, while the metal ore subsector grew by 20.8% off the back of zinc
production that spiked to 38.1%. The uranium subsector is still struggling, off
the back of weak demand and low market prices, but for a change the subsector
didn’t contract. Rather, it posted strong growth of 14.2% due to increased
production as a result of the new mine that came online during the quarter. The
other subsectors also registered strong growth of 31% due to marble production
that increased by 75%
The Manufacturing sector also showed signs
of a turnaround, with growth of 2.9% compared to a contraction of 10.7% in the
first quarter. This was as a result of superior performance in several
subsectors, with diamond cutting and polishing up by 37%, beverages up by 10.8%
and fish processing growing by 8.5%. Unfortunately, not all subsectors did
well, with chemical manufacturing and products declining by 16.2% and
non-metallic mineral products down by 4.1%. The Electricity and Water sector
also started to feel the effect of muted economic growth, with electricity down
by 0.5% and water down by 4.2%. The sector’s overall contraction of 1.1% is due
to a decrease in volumes sold to distributors, most likely as a result of usage
growth slowing in line with economic growth.
The Construction sector continues its slide
downwards, now in its sixth consecutive quarter of contraction. This sector has
been reduced to about 30% of its size as it was at the start of 2015, and half
the size it was at the end of 2016. It’s contraction of 44.9% recorded in the
first quarter has been followed with a contraction of 51.9% during this quarter,
mostly as a result of government construction reducing by 83.3%. There does
appear to be at least some signs of stabilization, with the value of buildings
completed increasing by two-thirds from first quarter figures.
Wholesale and retail trade continues to
feel the effects of the prolonged recession as it records its third consecutive
quarter of decline, contracting by 8.2%. The supermarket subsector went from a
small positive growth of 0.6% in the first quarter to a contraction of 0.7%
this quarter, with furniture sales similarly swinging from 4.2% positive growth
to an 11.6% decline. The contraction in vehicle sales increased its contraction
of 16.6% in the first quarter to 24.6% this quarter. Hotels and Restaurants,
however, reduced its contraction to only 3% in this quarter from 9.3% in the
first quarter.
The Transport and Communication sector
showed some recovery, growing by 3.5% this quarter, with port services
contracting by only 7.6% compared to 23.6% in the previous quarter, while
railway transport posted positive growth of 3.4%. The Financial Intermediation
sector continued to show slow growth, with only 0.9% recorded this quarter,
with the banking subsector contributing 1% growth and the insurance subsector
contributing 0.8%. Finally, the Public Administration, Defence, Education and
Health sector still shows a decline of 2.3% due to government consolidation. The
Education subsector showed growth of 1.4%, while the Health subsector grew by
0.3%.
It is clear from the data that we’re still
struggling, but there seems to be a silver lining around our dark clouds that
imply that with a bit of wind, the sun can shine again on our economy. We’ve
got several sectors performing admirably, with a few stragglers showing signs
of a turnaround, and others that are only struggling as a result of our
substandard growth, and should recover once growth returns. With a bit of hope,
and a bit of luck, our economy is on the verge of lifting itself out of this
recession, and it will only require our patience and support to do so. Namibia
has not let us down yet – let’s not let it down either.
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