Half A League Onward

Originally published in the Informanté newspaper on Thursday, 25 January, 2018.

Half a league, half a league, half a league onward. So 2018 started. But without proper economic reconnaissance, we might as well be following the six hundred into the valley of death. Luckily, we have no need to ride blind – the Bank of Namibia releases Economic Outlook reports to guide us going forward, so we might miss the cannons fired, volley’d and thunder’d.

The latest Bank of Namibia Economic Outlook Update was released in December 2017, and while the global macroeconomic outlook seems stable, our main interest is in the domestic economy for this year. To start with, they revised the estimated economic growth for 2017 downwards from their July 2017 projection of 2.1% to 0.6%, which is even lower than the 1.1% the economy managed in 2016. They do expect growth to improve over the medium term, but still only project growth for 2018 to be 2.2%, and for 2019 to be 3.1%. So for the foreseeable future, growth figures like those during the start of the decade, where we saw growth in the 5%+ range. 

Let’s dig into the different industries to see where these figures come from. Well, the primary industries did well in 2017, showing growth of 10.3%, and is projected to grow 5% in 2018 and 6.5% in 2019. Agriculture and Forestry with expected growth of 8.1%, 1.2% and 4% for 2017, 2018 and 2019 was helped along by good rainfall last year, with growth expected to moderate this year. Fishing, however, is suffering, with an expected contraction of -1.1% for 2017, with growth of 1.6% and 1.8% in 2018 and 2019. 

The mining sector, however, delivered to most growth in 2017, with 15% growth in 2017 and 7.5% and 8.7% expected in 2018 and 2019. While most of this was delivered by diamond mining during 2017, that subsector is expected to register only moderate growth during 2018 and 2019, with the slack being caught by the uranium mining industry. A great deal of uranium growth is expected from the Husab mine, with growth of 40.3% expected in 2019 due to its increased production. Let’s hope this optimism is warranted. 

Secondary industries contracted during 2017, and positive growth is only expected again in 2019. So for 2017, 2018 and 2019, expected growth is -1.1%, -0.6% and 0.6%. Most of this is due to the construction sector that massively contracted during the last few years, as it corrected following the construction boom of 2013. With the end of the accelerated implementation of government infrastructure projects and investment in mining construction slowing as mines become operational, the construction sector declined 26.2% in 2017, with expected declines of 11.2% in 2018 and 7.1% in 2019. 

The manufacturing sector grew by only 1.5% in 2017, but is expected to pick up to 2.5% and 2.6% in 2018 and 2019. During 2017, this was mainly supported by diamond processing, which grew by an impressive 21.9%, but is expected to moderate during 2018 and 2019, while other struggling subsectors such as meat processing and beverages is expected to recover. 

The tertiary industries slowed down during 2017, recording a mere 0.5% growth compared to 3.9% during 2016, but they’re expected to recover with expected growth of 1.8% and 2.5% in 2018 and 2019. The main culprits here remains the Wholesale and Retail Trade sector, which is greatly dependent on overall economic health, and predictably, they contracted by 6.4% during 2017, with a further 1.5% contraction expected in 2018 before returning to positive growth of 0.3% during 2019. 

Hotels and Restaurants slowed during 2017 to 3.5% growth, but they’re expected to recover to 4.7% and 4.4% in 2018 and 2019, boosted by new tourist arrivals from new airlines now operating in Namibia. The Financial Intermediation Sector also slowed to 1.2% during 2017, similarly affected by the general economic malaise, but the sector is expected to make a recovery, growing by 2.9% in 2018 and 2.6% in 2019. 

Monetarily, and in government circles, news also remained a mixed bag. Private Sector Credit Extension continued to slow, in both corporate and household sectors, while government debt grew to 41.2% of GDP. However, Namibia saw a massive improvement on our current account deficit, and our international reserves were boosted by higher SACU receipts and repayment of debts by the Banco Nacional de Angola. As a result, our import cover levels are currently at 5.1 months of imports. 

It is rather obvious that the economy is not running at full steam yet. 2017 may have been a difficult year, but 2018 looks to be a challenging one. So let us not walk blindly while blundering, like the six hundred. Ours is to make reply, we must reason why, for we’re not to do and die. Namibians must stay vigilant, stay informed, and stay focused on performance if we wish to avoid another economic year like 2017. Otherwise we’ll boldly rode and well, into the jaws of Death, into the mouth of Hell… Alongside the six hundred. (With apologies to Alfred, Lord Tennyson.)