Economy crawls into the green
24 September 2021 | Economics
Namibia’s economy grew by 1.6% for the three months ended 30 June, the first positive year-on-year quarterly growth since the end of 2019.
The latest data released by the Namibia Statistics Agency (NSA) must be seen in context, though. The growth comes from a historic low base, as the gross domestic product (GDP) grew by -11.6% in the second quarter of 2020 when economy started buckling under the impact of the Covid-19 pandemic.
Second-quarter growth hasn’t been positive since 2018, when it came in at 5.2%. Since the start of the current recessionary cycle in 2016, average GDP growth in the second quarter was 1.6%. In comparison, GDP growth in the same quarter in 2014 and 2015 was 5.4% and 4.7% respectively.
In real terms, which allow for factors like inflation, the economy generated about N$32.7 billion in the past quarter – around half a billion more than the same three months last year. However, it falls way short of the nearly N$37.4 billion produced in the second quarter of 2018.
Hotels and tourism, a proxy for the state of tourism, contributed N$489 million to the second-quarter GDP. Although an improvement of about 34% from a year ago, it is still N$239 million below the 2019 figure, before tourism was hit by the pandemic.
Wholesale and retail generated nearly N$3.2 billion in the past quarter, N$468 million better than a year ago. The sector remains in the dumps compared to the peak of about N$4.4 billion in the last quarter of 2016, as the highly-indebted consumer struggles to recover.
Construction’s precarious predicament continued with the sector growing by -16.9% in the past quarter. Except for the same quarter in 2019, when it grew by 0.9%, construction has recorded red second quarters since 2016. Average second-quarter growth since 2016 has been -20%.
Considerably less cattle and sheep marketed as farmers rebuild their herds following good rains resulted in agriculture registering annual growth of -6.9% during the past quarter.
Shrinking deposits and claims at banks, as well as low demand for new insurance policies coupled with cancelation of policies as businesses cut down expenses resulted in growth of -17% in financial services activities in the past quarter. The sector has now been in the red for six consecutive quarters.