Friday 14 May 2021
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Nothing on the horizon for domestic economy until 2020

The hope of a solid economic recovery continues to escape many Namibians as the weakened domestic growth will further be affected by global economic contraction due to trade wars, an uncertain Brexit, and a decline in business confidence in many countries.
That said, President Hage Geingob’s Independence Day promise of job creation is likely to be slapped by this weak global activity.
As the sub-normal growth spills into its 10th quarter, the economy has degenerated into depression mode. Commenting on the immediate future for ordinary citizens, economist and Professor at the University of Namibia, Roman Grynberg said the situation has shifted from a bad to a precarious situation.
The professor remarked that if the Geingob-government blames a weak global economy for causing domestic contraction between 2016 and now, how does it hope to turn around fortunes under the same global conditions ? That is the million dollar question.
“Namibia has three to four growth engines, and that is mining, fisheries and tourism and none of these sectors are in a sound position at the moment. We will definitely have policy issues. Our reputation in mining has deteriorated. We are not going to have any big new mines opening.”
“There has been a rise in tourism numbers but we have not seen any growth in recreational tourists. So where is growth coming from? The finance minister projected a 1.1% growth but that is too optimistic. There is nothing on the horizon,” he retorted.
Although treasury is expected to pump more money into construction with major works expected to kick-start in rural areas where a good number of schools are said to be awaiting refurbishments, a drought scourge is expected to subdue the economy.
Meanwhile, the Bank of Namibia released the April 2019 Economic Outlook Update with the domestic economic growth expected to recover, albeit by a slight margin in 2019, before improving further in 2020.
According to the bank, Namibia’s real GDP growth is projected to recover slightly to 0.3 percent in 2019, before improving to 1.9 percent in 2020.
The bank further reported that expected recovery during 2019 will be supported mainly by anticipated improvements in the construction and hotels and restaurants sectors.
Yet the economy will be spooked by persistently low uranium prices and unpredictable rainfall.
The bank said the low uranium price increases uncertainty about expected production from uranium mines, while the erratic rainfall may continue to negatively affect the performance of the agriculture sector beyond 2019.
Furthermore, the China/US trade tensions may negatively affect the demand for Namibian minerals.
China remains Namibia’s biggest trading partner on account of large volumes of uranium shipped there.
“Furthermore, a smaller contraction for wholesale and retail trade represents a reduced drag on overall growth when compared to the last two years. The latest overall growth projection of 0.3 percent for 2019 represents a downward revision from 1.5 percent published during December 2018.
More information about economic activities for 2019 is now available and it is clear that growth estimates for diamonds, uranium and metal ores are lower than what was anticipated in the December 2018 Update,” revealed the Outlook Update.
The central bank has said the global economy will only rise back to the 2018 level in 2020.
“According to the IMF’s World Economic Outlook (WEO) for April 2019, global growth is projected at 3.3 percent in 2019 and 3.6 percent in 2020.
The 3.3 percent projected for 2019 represents a 0.3 percentage point decline from the 3.6 percent growth estimated for 2018.
The slowdown in global output growth is largely attributed to waning cyclical forces in advanced economies as output gaps have been largely closed, US fiscal stimulus which is expected to diminish and the impact of higher import duties between the United States and China.
Furthermore, a decline in business confidence and higher policy uncertainty across many countries will hinder growth. The balance of risk to outlook remains mainly on the downside,” said the bank.
“Risks to the global growth outlook remain and include the possible collapse of the China/US trade negotiations, escalation of trade tensions to other countries and a no-deal withdrawal of the UK from the European Union.
Over the medium term, the key risks include climate change and political discord in the context of rising inequality,” concluded the central bank’s April update.

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