Economy loses nearly N$6bn in second quarter

25 September 2020 | Economics

Jo-Maré Duddy



WINDHOEK

About N$5.7 billion less flowed through the economy in the second quarter due to the lockdown and related Covid-19 measures compared to the same three months in 2019.

Data released by the Namibia Statistics Agency (NSA) yesterday penned the country’s gross domestic product (GDP) from April to June at around N$38.26 billion at current prices. This is the lowest figure for a second quarter since 2016.

Measured at constant 2015 prices – which, among others, allow for the impact of inflation – Namibia’s GDP was nearly N$32.03 billion, about N$4 billion smaller than that of the second quarter of 2019.

This is the weakest performance in any quarter since the second quarter of 2013. The NSA’s data currently only stretches back to 2013.

On an annual basis and measured at constant 2015 prices, the economy grew by -11.1% in the past quarter – the biggest contraction since 2014, according to available NSA figures. The closest figure to this the -5.1% of the first quarter in 2019.

In the first three months of 2020, growth was -1.8%. In the second quarter last year, it was -3.6%.

‘Initial impact’

Commenting on the latest official figures, Cirrus Securities said the “relatively large contraction” in the past quarter “captures the initial impact of the pandemic response measures on the Namibian economy”.

“However, the contraction would have been larger if not for the extremely high growth in agriculture for the second quarter of 2020,” the analysts said.

According to the NSA, agriculture and forestry grew by 47.2% in the past quarter compared to -31.8% in the same period last year.

Cirrus said this “abnormally strong growth” was due to “extreme growth for the crop farming sub-sector, which the NSA states rose 296.7% year-on-year as better rain fell this season after several years of drought”.

“Despite this, such high growth for the sector this year was unexpected and, to a small extent, distorts the overall growth figure.”

“The contractions reported for 14 of the 17 economic sectors are a clear indication of the impact of the pandemic and response measures to the economy, leaving little untouched,” Cirrus said.

Tourism slaughtered

According to NSA figures, hotels and restaurants – a proxy for tourism – were hit worst in the past quarter. The sector contracted by 64.2% compared to positive growth of 12.3% a year ago.

At constant 2015 prices, hotels and restaurants contributed just N$264 million to the GDP in the second quarter, N$474 million less than in the same three months in 2019. At market prices, the sector’s GDP contribution fell by N$572 million to N$332 million.

Manufacturing as well as transport and storing recorded contractions of just over 30%. At 2015 prices, manufacturing’s GDP contribution plummeted by nearly N$1.6 billion to N$3.6 billion. Transport and storing contributed N$708 million to the economy – a decrease of N$310 million year-on-year.

At market prices, manufacturing’s contribution dropped by about N$1.9 billion to around N$4.2 billion. That of transport and storing was N$765 million, down N$510 million.

Consumer

Wholesale and retail trade in the past quarter contracted by 22.5% year-on-year at 2015 prices. It contributed nearly N$2.8 billion to the GDP, about N$799 million less than in the second quarter of 2019.

At market prices, the sector’s GDP contribution was about N$3.95 billion, tumbling N$920 million on an annual basis.

Tax on products, or value-added tax (VAT), contracted by 25.8% year-on-year compared to the second quarter of 2019. At 2015 prices, this means N$707 million less. VAT’s contribution to the GDP in the quarter under review was nearly N$2.04 billion.

Cirrus said the significant decline in VAT collections is not just a gauge of reduced consumption activity through households and businesses, “but also a clear sign that government revenue collection this year will be poor”.Economy loses nearly N$6bn in second quarter

Jo-Maré Duddy

WINDHOEK

About N$5.7 billion less flowed through the economy in the second quarter due to the lockdown and related Covid-19 measures compared to the same three months in 2019.

Data released by the Namibia Statistics Agency (NSA) yesterday penned the country’s gross domestic product (GDP) from April to June at around N$38.26 billion at current prices. This is the lowest figure for a second quarter since 2016.

Measured at constant 2015 prices – which, among others, allow for the impact of inflation – Namibia’s GDP was nearly N$32.03 billion, about N$4 billion smaller than that of the second quarter of 2019.

This is the weakest performance in any quarter since the second quarter of 2013. The NSA’s data currently only stretches back to 2013.

On an annual basis and measured at constant 2015 prices, the economy grew by -11.1% in the past quarter – the biggest contraction since 2014, according to available NSA figures. The closest figure to this the -5.1% of the first quarter in 2019.

In the first three months of 2020, growth was -1.8%. In the second quarter last year, it was -3.6%.

‘Initial impact’

Commenting on the latest official figures, Cirrus Securities said the “relatively large contraction” in the past quarter “captures the initial impact of the pandemic response measures on the Namibian economy”.

“However, the contraction would have been larger if not for the extremely high growth in agriculture for the second quarter of 2020,” the analysts said.

According to the NSA, agriculture and forestry grew by 47.2% in the past quarter compared to -31.8% in the same period last year.

Cirrus said this “abnormally strong growth” was due to “extreme growth for the crop farming sub-sector, which the NSA states rose 296.7% year-on-year as better rain fell this season after several years of drought”.

“Despite this, such high growth for the sector this year was unexpected and, to a small extent, distorts the overall growth figure.”

“The contractions reported for 14 of the 17 economic sectors are a clear indication of the impact of the pandemic and response measures to the economy, leaving little untouched,” Cirrus said.

Tourism slaughtered

According to NSA figures, hotels and restaurants – a proxy for tourism – were hit worst in the past quarter. The sector contracted by 64.2% compared to positive growth of 12.3% a year ago.

At constant 2015 prices, hotels and restaurants contributed just N$264 million to the GDP in the second quarter, N$474 million less than in the same three months in 2019. At market prices, the sector’s GDP contribution fell by N$572 million to N$332 million.

Manufacturing as well as transport and storing recorded contractions of just over 30%. At 2015 prices, manufacturing’s GDP contribution plummeted by nearly N$1.6 billion to N$3.6 billion. Transport and storing contributed N$708 million to the economy – a decrease of N$310 million year-on-year.

At market prices, manufacturing’s contribution dropped by about N$1.9 billion to around N$4.2 billion. That of transport and storing was N$765 million, down N$510 million.

Consumer

Wholesale and retail trade in the past quarter contracted by 22.5% year-on-year at 2015 prices. It contributed nearly N$2.8 billion to the GDP, about N$799 million less than in the second quarter of 2019.

At market prices, the sector’s GDP contribution was about N$3.95 billion, tumbling N$920 million on an annual basis.

Tax on products, or value-added tax (VAT), contracted by 25.8% year-on-year compared to the second quarter of 2019. At 2015 prices, this means N$707 million less. VAT’s contribution to the GDP in the quarter under review was nearly N$2.04 billion.

Cirrus said the significant decline in VAT collections is not just a gauge of reduced consumption activity through households and businesses, “but also a clear sign that government revenue collection this year will be poor”.

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