Construction slaughtered in second quarter
Construction contributed a meager N$606 million to the GDP in the past quarter, N$656 million less than the same quarter in 2016.
About N$25.6 billion flowed into the Namibian economy in the second quarter this quarter, the least in three years.
The past quarter's gross domestic product (GDP) – in constant 2010 prices that take inflation into account – is N$434 million less than the same quarter in 2016, penning the latest economic growth at -1.7%.
The GDP in the first quarter of 2017 was about N$27.3 billion. Compared to this, N$1.7 billion less flowed into the economy in the second quarter.
The latest figures released by the Namibia Statistics Agency (NSA) show the country was stuck in a recession in the first six months of 2017. Last year, Namibia spent the second and third quarters in the red too.
One of the major reasons Namibia remains in recession is construction. The sector's woes worsened in the second quarter with growth tumbling to -51.9%.
In money terms, construction contributed a meager N$606 million to the GDP in the past quarter – N$656 million less than the same quarter in 2016. Compared to the first quarter of 2017, construction's contribution dropped by N$338 million.
The last time construction pumped this little into the economy was in the third quarter of 2010.
The NSA attributes the poor performance of the sector mainly to the real value of government expenditure on construction. In the past quarter it registered a contraction of 83.3% compared to an increase of 6.1% in the same quarter in 2016. The value of buildings completed, on the other hand, shows an increase of 16.6% compared to a steep decline of 40.9%, the NSA says.
Boom collapses
“The increase in the value of buildings completed is observed in the western and northern regions that registered growths of 65.6% and 112.0% respectively. However, the value of buildings completed by central region declined by 42.3% compared to a massive increase of 37.6% recorded in the second quarter of 2016,” according to the NSA.
Analysing the latest growth data, PSG Namibia says the construction boom has collapsed as mining and other large infrastructure projects were completed in 2015 and Government suspended construction projects to contain rising public debt.
“We expect the hard times in the construction sector to persist throughout 2017 as fiscal consolidation is set to continue and investment in the mining sector and other major infrastructure programmes has stalled,” PSG Namibia says.
Simonis Storm agrees. “We view the recession in the construction sector to be protracted for the short to medium term due to the expected implementation of budget ceilings as part of the fiscal consolidation course.”
Economic Association of Namibia (EAN) Director Klaus Schade says the construction sector will “feel the full impact of Government's budgetary alignments this year”.
“The job losses in this sector will have a negative impact on the wholesale and retail trade sector that contracted over the past three quarters. The recent drop in interest rates will however relieve some pressure on consumer spending,” EAN says.
Consumer
Money flowing wholesale and retail trade into the economy in the past quarter amounted to nearly N$3.38 billion. Although N$189 million more than in the first quarter, it dropped by N$301 million compared to the second quarter in 2016.
The sector registered negative growth for the past three quarters: -8.2% in the past quarter, -7.5% in the first quarter and -3% in the last quarter of 2016.
According to the NSA total revenue of wholesale and retail trade grew by -2.3% in the past quarter. Supermarket sales recorded growth of -0.7%, while furniture sales grew by -11.6%. Vehicle sale growth came in at -24.6%, the NSA says.
PSG Namibia says the poor performance of the sector reflects weaker domestic demand, job losses, fiscal tightening, stricter lending criteria and high inflation.
According to SS the contraction in the wholesale and retail trade sector points to continued diminishing business confidence and insufficient foreign and domestic demand as consumers remains under pressure.
SS forecasts economic growth of 0.5% this year, while PSG Namibia's prediction is 0.7%. Last year, Namibia's economy expanded by 1.1%.
The past quarter's gross domestic product (GDP) – in constant 2010 prices that take inflation into account – is N$434 million less than the same quarter in 2016, penning the latest economic growth at -1.7%.
The GDP in the first quarter of 2017 was about N$27.3 billion. Compared to this, N$1.7 billion less flowed into the economy in the second quarter.
The latest figures released by the Namibia Statistics Agency (NSA) show the country was stuck in a recession in the first six months of 2017. Last year, Namibia spent the second and third quarters in the red too.
One of the major reasons Namibia remains in recession is construction. The sector's woes worsened in the second quarter with growth tumbling to -51.9%.
In money terms, construction contributed a meager N$606 million to the GDP in the past quarter – N$656 million less than the same quarter in 2016. Compared to the first quarter of 2017, construction's contribution dropped by N$338 million.
The last time construction pumped this little into the economy was in the third quarter of 2010.
The NSA attributes the poor performance of the sector mainly to the real value of government expenditure on construction. In the past quarter it registered a contraction of 83.3% compared to an increase of 6.1% in the same quarter in 2016. The value of buildings completed, on the other hand, shows an increase of 16.6% compared to a steep decline of 40.9%, the NSA says.
Boom collapses
“The increase in the value of buildings completed is observed in the western and northern regions that registered growths of 65.6% and 112.0% respectively. However, the value of buildings completed by central region declined by 42.3% compared to a massive increase of 37.6% recorded in the second quarter of 2016,” according to the NSA.
Analysing the latest growth data, PSG Namibia says the construction boom has collapsed as mining and other large infrastructure projects were completed in 2015 and Government suspended construction projects to contain rising public debt.
“We expect the hard times in the construction sector to persist throughout 2017 as fiscal consolidation is set to continue and investment in the mining sector and other major infrastructure programmes has stalled,” PSG Namibia says.
Simonis Storm agrees. “We view the recession in the construction sector to be protracted for the short to medium term due to the expected implementation of budget ceilings as part of the fiscal consolidation course.”
Economic Association of Namibia (EAN) Director Klaus Schade says the construction sector will “feel the full impact of Government's budgetary alignments this year”.
“The job losses in this sector will have a negative impact on the wholesale and retail trade sector that contracted over the past three quarters. The recent drop in interest rates will however relieve some pressure on consumer spending,” EAN says.
Consumer
Money flowing wholesale and retail trade into the economy in the past quarter amounted to nearly N$3.38 billion. Although N$189 million more than in the first quarter, it dropped by N$301 million compared to the second quarter in 2016.
The sector registered negative growth for the past three quarters: -8.2% in the past quarter, -7.5% in the first quarter and -3% in the last quarter of 2016.
According to the NSA total revenue of wholesale and retail trade grew by -2.3% in the past quarter. Supermarket sales recorded growth of -0.7%, while furniture sales grew by -11.6%. Vehicle sale growth came in at -24.6%, the NSA says.
PSG Namibia says the poor performance of the sector reflects weaker domestic demand, job losses, fiscal tightening, stricter lending criteria and high inflation.
According to SS the contraction in the wholesale and retail trade sector points to continued diminishing business confidence and insufficient foreign and domestic demand as consumers remains under pressure.
SS forecasts economic growth of 0.5% this year, while PSG Namibia's prediction is 0.7%. Last year, Namibia's economy expanded by 1.1%.
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