The Namibia Statistics Agency (NSA) released revised National Accounts on September 12. The revised data – as opposed to the preliminary adjustments released earlier in the year – paint a far rosier picture of the desert economy’s growth last year, revised higher from 4.4% to 5.1%. However, GDP growth in the preceding two years was revised significantly lower: from 6.7% to 5.2% for 2012 and from 6% to 5.1% in 2011. The revised figures suggest Namibia’s economic growth has been remarkably stable and robust over the last three years despite the challenges posed by a sluggish global economy and a severe drought.
The NSA also released its latest quarterly GDP report on September 12. On a positive note, the revised figures suggest the economy expanded by 4.4% y-o-y during Q1, as opposed to an expansion of 1.6% y-o-y reported previously. However, this figure has to be interpreted with caution, as the economy contracted by 3.2% y-o-y in 2013 Q1, translating into some base effects. Furthermore, real GDP contracted by 1.2% q-o-q during 2014 Q1. The figures for the second quarter suggest the Namibian economy continues to face headwinds, as real GDP growth declined to 3% y-o-y. Even more concerning is the fact that quarterly real GDP growth has remained negative over the last three quarters (2014 Q2: -2% q-o-q; 2014 Q1: -1.2% q-o-q; 2013 Q4: -3.2 q-o-q), suggesting the economy is still in a technical recession.
WHY DO WE CARE? Similar to other economic metrics, Namibia’s GDP figures have been subject to significant revisions, which certainly suggests that a cautious approach to interpreting the most recent statistics would be most prudent. As expected, the main growth driver during Q2 was the construction sector, which expanded by a mammoth 32.1% y-o-y. The primary sectors continued to struggle for the most part, with the exception of the mining sector which recorded an expansion of roughly 6% y-o-y. Positively, the agriculture sector showed signs of recovering, seeing as the sector expanded by 24.4% q-o-q, although real value add remained lower than a year earlier.
We are more optimistic about Namibia’s growth prospects for 2014 H2. The construction sector will continue to be the main driving force behind economic growth. The primary industries should also continue to recover. The mining sector will be buoyed by a recovery in global uranium prices, while the recent lifting of a livestock export ban to South Africa bodes well for agriculture. On the downside, higher interest rates could adversely affect the consumption side of the economy, although recent figures suggest consumers still have an appetite for credit due to the fact that interest rates are still low from a historical perspective.
Analyst: Cobus de Hart