Windhoek
Second quarter numbers released at the end of September by the National Statistics Agency (NSA) show that the country’s Gross Domestic Product (GDP) growth slowed to 4.2 percent from 5.0 percent the previous year. Meanwhile, GDP growth for the first quarter of 2015 was revised upwards to 5.3 percent from 3.1 percent.
According to the data, slow growth during the second quarter was mainly attributed to the drop in mining and quarrying, manufacturing and fishing sectors – which recorded declines of 10.2 percent, 5.7 percent and 2.8 percent respectfully.
Construction on the other hand recorded a whopping 48.9 percent growth over the 12-month period. Other contributors to GDP were transport and communication, as well as the utility sectors which recorded a growth in real value-added of 6.5 percent and 1.9 percent respectfully.
The utility sector (1.9 percent) had a positive impact on the overall growth in the GDP figures. The NSA cited that this sector’s growth was mainly fuelled by the water sub-sector that recorded an increase of 4.9 percent, furthermore, the electricity sub-sector also posted positive growth of 1 percent compared to a decline of 1.1 percent recorded the previous year.
“The water sector will become a threat to the Namibian economy if no rainfall is recorded in the next rainy season. Electricity supply is under pressure, although sufficient for now, but as the economy grows so does demand for electricity.
“Namibia imports about two thirds of its electricity from Eskom and Zimbabwe – both sources under considerable supply strain themselves. Hence both water and electricity supply security need to be addressed urgently,” noted James Cumming, the Director of Research at Simonis Storm Securities (SSS).
He added that special focus was further placed on the construction sector, which recorded a huge growth of 48.9 percent in the second quarter of 2015, compared to 41.1 percent in the second quarter of 2014.
“This was mainly a result of a large increase in construction of buildings undertaken, such as the FNB and the various government agency buildings and the port expansion, as well as road construction (dual carriage way between Windhoek and Okahandja) and the resurfacing of roads in Windhoek. If construction growth was zero then GDP would only have grown by 1.4 percent in the second quarter of 2015,” Cumming remarked.
The transport and communication sector also picked up in the second quarter of 2015 with a growth rate of 6.5 percent, compared to 5.8 percent in the same quarter last year. “Increased telecommunication, post and courier services, coupled with an increase in passenger transport by road, travel agents and tour operations had led to growth in this sector. Air transport continues to be under pressure,” said Cumming.
Furthermore, declining growth had been recorded in most categories.
The agriculture and forestry sector recorded slow growth of 3.1 percent, compared to 9.7 percent recorded in the 2Q2014. Pressure in crop farming due to poor rainfall led to declines in agricultural services and production in the second quarter.
Despite the strong growth recorded in livestock farming (14.9 percent), farmers continue to de-stock as a measure to manage the herd under the current drought conditions. The fishing sector that contributed about 3 percent to the second quarter of 2015 GDP, recorded a growth of -2.8 percent compared to an increase of 5.5 percent in the second quarter of 2014.
The mining and quarrying sector contributed about 9 percent to GDP in the second quarter of 2015. This sector declined by 10.2 percent in second quarter of 2015 compared to 1.1 percent decline in the same quarter of 2014. Low global commodity prices caused a significant drop-off in the investment in the mining sectors. Poor performance in the diamond sub-sector continues to give disappointing results.
Manufacturing contracted, recording 5.7 percent growth during the second quarter of 2015, compared to 8.2 percent in the same quarter of 2014. Other sectors, such as wholesale and retail trade, hotels and restaurants, financial intermediation and public administration, defence, education and health also recorded slow growth of 3.1 percent, 2.8 percent, 2.5 percent and 4.2 percent respectfully.
Meanwhile, Cumming noted that the excessive importation of goods and services and the weakening rand during the second quarter led a widening trade balance. The trade deficit widened to N$9.9 billion in the second quarter of 2015 from the first quarter of 2015 revised deficit of N$6.9 billion.
Namibia’s overall imports stood at N$23.8 billion and exports amounted to N$13.9 billion. The revenue from exportation of goods and services declined by N$8.8 billion to N$13.9 billion, compared to N$22.7 billion recorded in the previous year.
NSA cited that the widening deficit continues to underscore Namibia’s dependence on imports, and her vulnerability to any slowdown in supply from her largest trading partner, South Africa. Namibia’s bulk value of about N$8.8bn in the 2Q2015 was destined to Botswana, South Africa, Switzerland, Angola and Zambia.
These markets accounted for an increase of 63.4 percent of total exports earnings, compared to the 62 percent recorded in the first quarter 2015 and 41 percent of the second quarter of 2014. In the second quarter of 2014 export earnings from these countries accounted for N$9.3 billion and the growth declined by 5 percent in the second quarter of 2015. This was mainly due to declining external demand from Botswana, Switzerland, Angola and Spain.
In Botswana the value of diamond demand fell by 7 percent to N$3.3 billion from N$3.6 billion in second quarter of 2014. According to the NSA report, Angola’s decline in exports was pronounced in the value of exported vehicles, boilers, electrical machinery and equipment, furniture and fish, which dropped by N$0.685 billion in the second quarter of 2015.
“Exports in the diamond and fishing products are likely to continue deteriorating in the coming quarters”, noted Cumming.
Main imports in the second quarter of 2015 were recorded from South Africa, China, India, Switzerland and Botswana, these accounted for 82 percent of total imports up from 48 percent in the second quarter of 2014. The NSA cited the decline in the overall import bill revealed dwindling domestic demand for commodities largely supplied by DRC, Germany and the USA.
The main declines was from Germany which fell by 64.8 percent and the USA by 46 percent. Values from South Africa, China and India continues to be strengthen significantly.
SSS noted that the leading exported products during the second quarter of 2015 were diamonds, fish, copper, cathodes, copper ores and zinc. Revenue from the aforementioned products rose by 3.6 percent to N$10 billion from N$9.7 billion in the first quarter of 2015, compared to the second quarter of 2014 when the value dropped by 7.4 percent from N$10.8 billion.
Furthermore, the country remains a net-exporter of live animals, which continues to form part of the major export revenue earners from the economy.