28 Jul 2016 12:00pm
WINDHOEK, 28 JUL (NAMPA) - Namibias Gross Domestic Product (GDP) growth is projected at 4.4 per cent for 2016 and 5.4 per cent for 2017 respectively, according to the Bank of Namibia (BoN).
In its economic outlook for July released on Wednesday, the banks Director of Strategic Communication and Financial Sector Development, Ndangi Katoma said the projected growth for 2016 represents a slowdown from the preliminary national account estimates of 5.7 per cent for 2015.
The expected slowdown in 2016 is mainly attributed to the decline in growth of the construction sector, as well as, the diamond mining sub-sector. There are notable improvements in the uranium mining sub-sector and a lesser contraction in the agriculture sector.
However, these developments may not be sufficient to avoid a slowdown in overall growth for 2016. Over the medium-term, growth will be supported by increased mining output from new and existing mines, and sustained growth in wholesale and retail trade, he noted.
Katoma warned that the risks to the domestic outlook include low commodity prices that may lead to deterioration in the countrys terms of trade and exert pressure on both the current account balance and the international reserves.
With regards to the electricity supply, he said fears seemed to have eased, but Namibia is faced with water shortages, which may further restrain growth in sectors such as construction, beverages, meat processing and agriculture.
Meanwhile, increased uncertainties in the South African economy, mainly in the form of low growth and possible changes in credit ratings of the economy are likely to increase exchange rate volatility further with consequential effects on inflation.
The persistent drought and adverse weather conditions experienced in the southern African region constitutes a major risk to growth in the agricultural sector. Growth in South Africa is projected to drastically slow down during 2016, due to lower export prices, labour unrests, weak investor confidence, low power generation and lower household expenditure. The economy is projected to slow to 0.1 per cent in 2016, compared to the GDP growth of 1.3 per cent in 2015. During July 2016, the South African Reserve Bank also revised its growth forecast for the South African economy to 0.0 per cent in 2016, from 0.6 per cent projected in May 2016. This growth is then expected to improve to 1.1 per cent in 2017, Katoma said.