Economy on life support

The real gross domestic product last year grew by -8%, bringing the average annual economic growth since 2016 to -1.7%.

01 April 2021 | Economics

Jo-Maré Duddy – The impact of the Covid-19 pandemic, coupled with the ongoing recession, sucked more than N$5 billion out of the economy last year.

Preliminary data released by the Namibia Statistics Agency (NSA) yesterday, showed the country had a nominal gross domestic product (GDP) of about N$176.3 billion in 2020, compared to nearly N$181.6 billion the previous year. This is the lowest nominal GDP since 2017.

Namibia’s real GDP – measured at the constant prices of 2015 to allow for, among others, the impact of inflation – came in at nearly N$133.7 billion. Compared to 2019, this is a drop of around N$11.6 billion. This is the lowest real GDP since 2013.

Namibia’s economy grew by nearly -8% in 2020, Namibia’s deepest contraction on record. Growth was worse than the forecast of the Bank of Namibia (BoN) in February and finance minister Iipumbu Shiimi in his budget speech last month. Both the BoN and Shiimi hoped for a contraction of 7.3%.

Average annual economic growth since 2016 now stands at -1.7%.

OUT OF POCKET

The NSA’s preliminary national accounts for 2020 show how economic woes impacted Namibians.

Compensation received by employees totalled N$80.35 billion, some N$661 million or 0.8% less than in 2019.

Gross national income (GNI), the total amount of money earned by a nation's people and businesses, came in at about N$173.3 billion – around N$3.8 billion or 2.1% down from 2019.

Real GNI per capita for 2020 was N$56 284, down N$4 847 or 7.9% from 2019. This is the lowest real GNI per capita in the NSA’s rebased records going back to 2013 and a drop of nearly 12% from its peak of N$63 921 in 2015.

Gross national disposable income fell by about N$400 million or 0.2% year-on-year (y/y) to about N$195.5 billion in 2020.

Private consumption expenditure at current prices last year amounted to about N$121.5 billion, nearly N$5.5 billion less than in 2019.

Private consumption expenditure at constant 2015 prices fell by about N$10.2 billion or 9.3% y/y and was the lowest since 2014.

Net investment, or gross fixed capital formation, at constant 2015 prices, plummeted by more than N$3.7 billion or 15.9% to some N$19.7 billion, the lowest on the NSA’s rebased records. Net investment in Namibia has been nose-diving since 2015.

KNOCKED OUT

The contribution of four sectors to Namibia’s nominal GDP fell by more than N$1 billion y/y.

Manufacturing suffered the biggest blow, with its GDP contribution falling by about N$3.1 billion to nearly N$19.4 billion, the lowest since 2016. It contributed 11% to the nominal GDP compared to 12.4% in 2019.

The contribution of both wholesale and retail trade, as well as hotels and restaurants (a proxy for tourism) shrunk by about N$1.2 billion y/y. Wholesale and retail’s contribution of about N$17 billion represented 9.6% of the nominal GDP (2019: 10.0%), while hotels and restaurants contributed nearly N$2.6 billion or 1.4% (2019: 2.1%). For both these sectors, it is the lowest nominal GDP contribution on the NSA’s rebased records.

Transport and storage contributed about N$4.5 billion to the nominal GDP, some N$1.1 billion down from 2019. Its GDP share dropped from 3.1% to 2.6%, the lowest since 2013.

Financial and insurance services activities missed the N$1-billion mark by an inch. It pumped nearly N$11.7 billion into the economy in 2020, about N$989 million down from 2019. Its GDP contribution declined from 7% to 6.6%.

In terms of real GDP, the sectors recorded the following growth: Manufacturing -19.6%; wholesale and retail trade -11.7%; transport and storage -22.4%; and financial and insurance services activities -11.7%. Tourism’s y/y growth came in at a surprising -33.1%, as the BoN still forecast -55% barely two months ago.

GREEN SHOOTS

Agriculture blossomed last year: Livestock farming contributed nearly N$6.3 billion to the nominal GDP, an increase of nearly N$1.1 billion y/y. Crop farming and forestry’s contribution rose by some N$2.2 billion to nearly N$5.2 billion. Livestock’s contribution to the nominal GDP rose from 2.9% to 3.5%, while crop farming and forestry’s was up from 1.6% to 2.9%.

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