Edgar Brandt
Windhoek-The latest gross domestic product (GDP) figures from the Namibia Statistics Agency (NSA) indicate that the domestic economy contracted by 2.7 percent in the first quarter of 2017 compared to a 4.1 percent growth recorded in the corresponding quarter of 2016. It is important to note, however, that these statistics also feature revisions for all four quarters of the 2016 calendar year, which implies that preliminary GDP figures presented earlier this year will most likely be revised downwards to reflect a contraction in 2016.
The poor performance is mainly attributed to the construction, manufacturing, wholesale and retail trade and hotels and restaurants sectors that contracted by 44.9 percent, 10.7 percent, 7.4 percent and 9.3 percent in real value added, respectively.
According to NSA CEO and statistician general, Alex Shimuafeni, slower growths were observed in sectors such as financial intermediation, transport and communications and fishing that registered 0.1 percent, 0.7 percent and 4.6 percent in real value added, respectively. Financial intermediation, public administration and defence and health sectors all recorded slower growths in real value added of 0.1 percent, 0.7 percent and 7.1 percent in the first quarter of 2017 compared to strong growths of 3.6 percent, 8.2 percent and 12.5 percent of the corresponding quarter of 2016, respectively.
In contrast to the slow growth, sectors such as agriculture, mining and quarrying recorded double-digit growth of 10.5 percent and 16.8 percent compared to the contractions recorded in the corresponding period. In addition, the water and electricity sectors also posted strong growths of 6.1 percent compared to a marginal growth of 0.3 percent in real value added registered in the same quarter of 2016.
“The data is broadly in line with our expectation and reflects the sentiment on the ground given that the period under review was the last of an extremely challenging fiscal year. We remain of the opinion that while the outlook is precarious, second quarter numbers (for 2017) will most likely show an improvement aided by renewed focus in the new fiscal year, continued recovery in diamond mining and agriculture, and prospects of improved SACU receipts and statistical factors owing to a low base,” said Ngoni Bopoto, research analyst at Namibia Equity Brokers.
Bopoto added that while it remains the most widely used number, focus on GDP growth as a measure of economic development has been critiqued around the globe. “Particularly in a developmental state such as ours, where it would be beneficial to measure attributes beyond those captured in the national accounts. For instance, we all realise the importance of the informal sector, which, according to the IMF, accounts for about 45 percent of economic output in developing nations – however the bulk of activity in this sector is not captured by the GDP measure. Similarly, the depletion of natural resources and environmental degradation is not accounted for as these are considered to have been provided free by nature. Perhaps the most misleading element of GDP is that economic activity conducted by multinationals within the borders of a country is ascribed to the country, whereas most of the economic benefit accrues to non-resident entities,” Bopoto added.