Business Reporter
THE Namibian economy expanded by 3.5% year on year (y/y) in the second quarter of 2024, indicating a deceleration from the 4.3% y/y growth recorded in the first quarter and slightly below the 3.6% y/y growth achieved in the same period of 2023.
“As we approach the final quarter of 2024, Namibia’s economic outlook remains favourable, with several key factors expected to drive GDP growth. Inflation has steadily eased, averaging 4.8% year-to-date. While prices remain elevated, the deceleration in inflationary pressures is providing much-needed relief to both consumers and businesses, helping to stabilize the cost of living and business operations. Another contributing factor to economic growth is the recent repo rate cut by the Bank of Namibia. By lowering borrowing costs, this policy move is anticipated to stimulate both investment and consumer spending, ultimately bolstering overall economic activity,” Halleluya Ndimulunde, Research Assistant at Simonis Storm Securities, explained.
She added that the tourism sector, a critical pillar of Namibia’s economy, continues its recovery, bringing in foreign revenue and supporting various industries.
“Additionally, tax relief measures and tax refunds are expected to further enhance consumer spending. However, the increased consumption driven by these policies carries the risk of demand-pull inflation, which could partially offset the benefits seen elsewhere. The Namibia Statistics Agency’s upcoming household and expenditure survey will provide crucial insights into domestic consumption patterns and is expected to generate seasonal employment, offering a temporary boost to household incomes and spending. Similarly, the national elections on the horizon are likely to lead to heightened government spending and the creation of seasonal jobs, particularly in logistics and administration. However, despite the positive outlook, risks remain, particularly in the mining and quarrying sector. Diamond production and sales continue to face headwinds, and any further downturn in this sector could undermine Namibia’s overall growth prospects,” Ndimulunde said.
Looking at the performance of the economy on a quarterly basis, the economic researcher said that the first quarter’s growth figure was revised downward from an initial estimate of 4.7% y/y to 4.3% y/y.
She added that this revision was driven by adjustments in key sectors, including wholesale and retail trade, electricity and water, financial services, taxes on products, and other private services.
Ndimulunde added that all industries, with the exception of agriculture and mining, experienced real growth in the second quarter of 2024.
“The overall slowdown in growth during this period was primarily attributed to weaker performance in secondary industries, particularly the manufacturing sector, which accounts for 11.8% of GDP, the second-largest share among all sectors. Additionally, the electricity and water industry contributed to the muted pace of growth, as said by the Namibia Statistics Agency (NSA). Tertiary industries demonstrated the most significant improvement, driven by robust performance in the financial services sector. The recovery in financial services provided substantial support to overall GDP growth during the quarter,” Ndimulunde summarized.
She added that in contrast, primary industries faced challenges, with agriculture, forestry, and the mining and quarrying sectors underperforming.
“The weak performance in these key sectors resulted in a lower overall growth contribution from primary industries. In terms of sector-specific growth rates, primary industries expanded by 4.9%, secondary industries by 1.5%, while tertiary industries outperformed with a strong growth rate of 6.9% in the second quarter of 2024,” the researcher said.
