GDP growth projected to average 5.6%

September 6, 2015, 4:52pm

GDP growth projected to average 5.6%

The Namibian economy is projected to grow at an average rate of 5.6% in the next three years. The projections set for the 2015, 2016 and 2017 financial years stand at 5.4%, 6% and 5.8%, respectively.

The National Planning Commission (NPC) Public Relations Officer, Fillemon Nangonya, said the expected growth will mainly be driven by the supply-side via expansion in most economic production sectors, saying the manufacturing, mining as well as public sector are expected to be the main drivers of this growth.

At present, the construction sector is the fastest-growing sector averaging growth of 15.3%. However, its contribution to GDP growth is very minimal, averaging only 3.5% over the same period.

“Though its contribution to total GDP is very low compared to other sectors, the construction sector is among the top five sectors in terms of job-creation, as it accounts for over 7% of the total employed after the agriculture, trade and private household sectors in Namibia. Put differently, this means that the construction sector significantly employs more people than mining, fishing, finance and other sectors,” the NPC stated.

Over the past five years, the mining sector’s growth averaged 7.7%, and the sector’s contribution to GDP over the same period averaged 11.5%.

“In terms of employment, the sector employs roughly around 5% of the total employed. Additionally, in terms of growth in employment numbers, the sector has been able to grow marginally by around 2% over the last two years,” the NPC said.

The agriculture and construction sectors are currently highly economically-active and remain to be sectors with huge potential, both in terms of job-creation and poverty reduction.

“This is evidenced by the fact that the two sectors remain to be sectors with high employment-creation opportunities, especially for unskilled people. However, in terms of ranking the top five sectors contributing the most to total GDP, the top sectors remain manufacturing, mining, wholesale trade, retail trade and repairs and real estate and business sectors,” noted the NPC.

Currently, the construction sector is growing by more than 10%, and contributed 3.5% and 3.3% to the local GDP during the 2011 and 2012 financial years, respectively, while it contributed around 4% during the 2013 and 2014 financial years, respectively.

According to the Namibia Statistics’ Agency (NSA)’s Preliminary National Accounts of 2014, the construction sector’s contribution is significantly low, when compared to the growth attained by the sector, which was 15.9% and 8.7% during the 2011 and 2012 financial years, respectively, and 30.2% and 14.6% during the 2013 and 2014 financial years, respectively.

The agriculture sector’s growth has currently been slow due in part to misfortunes, such as the impact of climate change, which has recently caused drought as well as low rainfall affecting the sector’s growth and contribution. As a result of this, it registered a very dramatic contraction of 26.7 per cent in 2013, albeit recovering to 6.5 per cent in 2014.

The NPC stated that in terms of its contribution to GDP, the agriculture sector contributed around 4% on average over the past five years. Its contribution slowed down somewhat to around 3% over the last two years due to misfortunes experienced in the sector. Its share of contribution to the GDP was 5% and 4.9% in 2011 and 2012, respectively, while it slowed down to 2.9% and 3.2% during the 2013 and 2014 financial years, respectively.

“However, despite these dismal performances, the sector remains the highest employer and the main source of food and income, especially to the poorest in the rural areas,” said the NPC.

Meanwhile, the mining sector remains the main source of growth to the local economy, although the sector is highly susceptible and volatile to external shocks.

“As such, it fluctuates a lot as it largely depends on changes in commodity prices in the international markets, and changes in output and income in the global market. The sector grew by 1.1% in 2013, albeit contracted by 4.6% in 2014. In terms of its contribution to total GDP, the mining sector accounted for a share of 8.7% and 12.7% in 2011 and 2012, respectively, as well as 12.6% and 13% during 2013 and 2014, respectively,” the NPC said.

by Charmaine Ngatijheue