Tertiary sector to drive recovery

The Bank of Namibia projects growth of 2.6% in the tertiary sector this year and 0.3% in the primary sector, with the secondary sector expected to record growth of -1.6%.

06 December 2021 | Economics

Risks to domestic growth are dominated by travel restrictions that are still in place for many countries, exacerbated by new waves of coronavirus infections and the pace of vaccinations in Namibia. – Bank of Namibia

Jo-Maré Duddy – Expected recovery in Namibia’s tertiary sector will drive the central bank’s forecast growth of 1.5% in the domestic economy in 2021.

The Bank of Namibia (BoN) on Friday released its latest economic outlook update, which is slightly better than the 1.4% forecast by the central bank in August this year. Namibia’s economy last year contracted by an historic 8.5%.

“The projected improvements are mainly due to base effects and better growth prospects for the mining industry and most industries in the tertiary sector,” the BoN said.

For 2022 and 2023, the BoN now forecasts growth of 3.3% and 4.0% respectively.

The BoN projects growth of 2.6% in the tertiary sector and 0.3% in the primary sector, with the secondary sector expected to record growth of -1.6%.

The biggest forecast contractions in the secondary sector are basic non-ferrous metals (-35.9%), construction (-11.5%), meat processing (-6.7%), as well as water and electricity (-4.4%).

In 2020, secondary industries grew by -13% overall.

Pandemic

Wholesale and retail, part of tertiary industries, is projected to grow by 4.7%, following -11.6% in 2020. Hotels and restaurants, a proxy for tourism, is expected to grow by 1.7%. In 2020, this sector contracted by 31.2%.

In 2020, tertiary industries grew by -5.7% overall.

Agriculture, forestry and fishing is forecast to contract by 1.3% in 2021, following growth of 6.1% last year. Growth of 1.8% is projected for mining and quarrying compared to an actual contraction of 14.9% in 2020.

“Risks to domestic growth remain dominated by the impact of the Covid-19 pandemic, but also include persistently low international prices for some of Namibia’s export commodities and climatic swings,” the BoN said.

It continued: “Risks to domestic growth are dominated by travel restrictions that are still in place for many countries, exacerbated by new waves of coronavirus infections and the pace of vaccinations in Namibia. The latest variant known as Omicron, has led to tighter travel restrictions, especially affecting Southern African countries.”

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