THE domestic economy is expected to fall into a deeper contraction during 2019, before returning to positive growth in 2020.
The domestic economy is projected to contract by 1.7% in 2019 before recovering to growth of 0.8% and 1.2% in 2020 and 2021, respectively.
This was revealed by Bank of Namibia (BoN), which released its Economic Outlook report for July 2019 yesterday.
Ebson Uanguta, deputy governor of BoN stated that the projected contraction of 1.7% for 2019 represents a further deterioration from a mild contraction of 0.1% in 2018, according to NSA’s preliminary estimates.
He added that the expected deeper contraction during 2019 will be in line with the devastating drought being experienced currently and the anticipated contractions in major sectors such as diamond mining and wholesale and retail trade.
Uanguta further said that an anticipated reduced contraction in the construction sector represents a reduced drag on overall growth when compared to the last two years, but its impact on overall growth will be offset by weaknesses in other sectors during 2019.
“Risks to the domestic economic outlook remain and include the persistently low uranium price and unpredictable rainfall. The low uranium price continues to adversely impact the prospects for uranium production in the country, while the erratic rainfall may continue to negatively affect the performance of the agriculture sector beyond 2019,“ Uanguta summarised.
Furthermore, the China/US trade tensions may negatively affect the demand for Namibian minerals and products
Uanguta said the latest growth projection for 2019, is a downward revision when compared to the April 2019 update, largely due to the projected weaker performance in agriculture and wholesale and retail sectors.
The latest overall growth projection of -1.7% for 2019 represents a downward revision from 0.3% published during April 2019.
“Year-to-date information about economic activity for 2019 so far suggests that growth estimates for agriculture, wholesale and retail trade, as well as net taxes on products are likely to be weaker than what was anticipated in the April 2019 update,” Uanguta concluded.