Economy reaps grim quarter

Jo-Maré Duddy – Namibia’s third quarter GDP, measured at 2015 constant prices, was the lowest in more than seven years.

Data released yesterday by the Namibia Statistics Agency (NSA), showed a gross domestic product of about N$32.17 billion in the past quarter – N$221 million less than that of the second quarter and a plunge of nearly N$3.8 billion compared to the GDP of the third quarter of 2019.

Economic growth is measured at constant prices – in the NSA’s case, that of 2015 - to allow for inflation adjustment. The last time Namibia reported such low real GDP figures was in the first quarter of 2013 when the GDP was about N$31.6 billion.

Year-on-year (y/y), Namibia’s economy grew by -10.5% in the past quarter. Revised NSA figures show growth of -10.1% in the second quarter and -1.4% in the first. The economy grew by -2.1% in the third quarter of 2019.

Namibia’s real GDP for the first three quarters of 2020 amounts to about N$98.75 billion – nearly N$7.9 billion or 7.4% less compared to the same period in 2019.

Commenting on the stats, Cirrus Securities said “the depth and breadth of the third quarter contraction is concerning, particularly as it is deeper than the second quarter figure despite the economy being relatively more ‘open’”.

The economy has now contracted in 12 of the last 18 quarters, the analysts added.

TOURISM, MANUFACTURING

With y/y growth of -54.9%, tourism proxy hotels and restaurants was hit the worst by the impact of Covid-19.

The sector contributed N$401 million towards the real GDP, about N$489 million less than the third quarter of 2019.

Hotels and restaurants contributed about N$1.2 billion to the real GDP in the first three quarters of 2020, plunging nearly N$1.1 billion or 46.5% from the same period in 2019.

Manufacturing’s contribution in the past quarter was nearly N$3.44 billion, down N$1.1 billion or 24.6% from a year ago. The sector contributed around N$11.1 billion to the real GDP in the first 9 months of 2020, down 20.5% or nearly N$2.9 billion from the first three quarters of 2019.

The NSA attributed the drop mainly to “substantial declines in the subsectors of basic metals, beverages and other food products that registered negative growths of (63.7%), (39.4%) and (12.2%) during the third quarter of 2020 compared to positives growths of (18.6%), (11.4%) and (7.6%) in the corresponding quarter of 2019, respectively”.

Meat processing recorded a decline of 67% in real value added in the past quarter, while the figure for grain mill products shrank by 3.6% and dairy products contracted by 3.5%.

MINING, FISHING

Mining’s contribution to the real GDP of the past quarter was about N$2.38 billion, a drop of nearly N$1.06 billion or 30.7% compared to the third quarter of 2019.

This is the largest decline in at least six years, Cirrus said.

The sector’s real contribution to the economy in the first three months of 2020 totalled about N$8.9 billion compared to some N$10.2 billion in the corresponding period of 2019, representing a decrease of around N$1.3 billion or 12.7%.

The significant drop in output in the past quarter is attributed to diamond mining, as low prices and the supply chain bottlenecks led to reduced mining operations, Cirrus said. Additionally, zinc output dropped as Skorpion Zinc stopped operations.

“The fourth quarter is likely to have similarly poor showing, with reduced diamond output given the market dynamics and the reduction in zinc output with Skorpion out of the picture,” the analysts added.

Fishing’s real value added in the past quarter was about N$1.05 billion, down N$194 million or 15.6% y/y.

Cirrus said fishing’s third consecutive quarter of decline was “likely the result of ongoing uncertainty in the industry and difficulties operating during the pandemic and resultant restrictions”.