Construction slows economy
Economic growth will be strained owing to a slow-down in construction activities says PSG Konsult.
The economy is in for a rough ride, owing to contractions in construction as fiscal consolidation measures continue, according to PSG Konsult which has released a note following the release of the growth figures for the first half of 2017 by the Namibia Statistics Agency.
With most construction activities largely coming to an end, its analyst Michele Arnold said the economy would come under some strain. “The construction boom has collapsed as mining and other large infrastructure projects were completed in 2015 and the government suspended construction projects to contain rising public debt,” she said in relation to the growth figures released by the NSA.
“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 has stalled. The trade sector has also performed poorly of late,” said Arnold.
Growth in wholesale and retail trade sales declined from 8.2% in 2015 to 3.4% in 2016. The poor performance of the trade sector reflected weaker domestic demand, according to Arnold. “We expect that a modest recovery in growth, a moderation in inflation and unchanged interest rates will support a rebound in the trade sector through 2017,” said Arnold.
The manufacturing sector should recover somewhat during the remainder of 2017 in line with increased output from mining and agriculture due to the strong links with these sectors. “We forecast a slight rebound in growth to 2.6% in 2017 from 0.2% in 2016. This is mainly on the back of an expected strong performance in mining exports as diamond production recovers and output at the new gold, uranium and copper mines is ramped up,” she said adding, “The water-dependent agricultural and manufacturing sectors are also expected to achieve moderate recoveries as good rainfalls have continued to bring relief from the worst drought on record.”
However, further economic stagnation and credit downgrades in South Africa, as well as the possibility that commodity prices could move sideways in 2017, pose significant downside risks to our growth forecast.
The domestic economy contracted by 2.7% in the first quarter of 2017 compared to a 4.1% growth recorded in the corresponding quarter of 2016. The poor performance can mainly attributed to the construction, manufacturing, wholesale and retail trade and hotels and restaurants sectors that contracted by 44.9%, 10.7%, 7.4% and 9.3% in real value added, respectively, the Namibia Statistics Agency said last week.
OGONE TLHAGE
With most construction activities largely coming to an end, its analyst Michele Arnold said the economy would come under some strain. “The construction boom has collapsed as mining and other large infrastructure projects were completed in 2015 and the government suspended construction projects to contain rising public debt,” she said in relation to the growth figures released by the NSA.
“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 has stalled. The trade sector has also performed poorly of late,” said Arnold.
Growth in wholesale and retail trade sales declined from 8.2% in 2015 to 3.4% in 2016. The poor performance of the trade sector reflected weaker domestic demand, according to Arnold. “We expect that a modest recovery in growth, a moderation in inflation and unchanged interest rates will support a rebound in the trade sector through 2017,” said Arnold.
The manufacturing sector should recover somewhat during the remainder of 2017 in line with increased output from mining and agriculture due to the strong links with these sectors. “We forecast a slight rebound in growth to 2.6% in 2017 from 0.2% in 2016. This is mainly on the back of an expected strong performance in mining exports as diamond production recovers and output at the new gold, uranium and copper mines is ramped up,” she said adding, “The water-dependent agricultural and manufacturing sectors are also expected to achieve moderate recoveries as good rainfalls have continued to bring relief from the worst drought on record.”
However, further economic stagnation and credit downgrades in South Africa, as well as the possibility that commodity prices could move sideways in 2017, pose significant downside risks to our growth forecast.
The domestic economy contracted by 2.7% in the first quarter of 2017 compared to a 4.1% growth recorded in the corresponding quarter of 2016. The poor performance can mainly attributed to the construction, manufacturing, wholesale and retail trade and hotels and restaurants sectors that contracted by 44.9%, 10.7%, 7.4% and 9.3% in real value added, respectively, the Namibia Statistics Agency said last week.
OGONE TLHAGE
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