THE closely integrated economic ties with South Africa is bound to have a definite negative effect on Namibia’s economic recovery as the country’s southern neighbour showed an alarming slowdown in the first quarter of the year.
Finance Minister Calle Schlettwien said it would be naive to think that the slowdown south of the border would not spill over and negatively impact the recovery of Namibia’s economy.
“We are definitely worried about the contraction of 3, 2 percent. It is rather a big contraction and what concerns us even more is the big slowdown in the manufacturing sector of South Africa although all sectors showed a negative growth.”
Contraction of an economy occurs when a country shows a decline in the national output of goods and services. When coupled with a drop in personal income, industrial production, and retail sales it exacerbates the contraction.
Because South Africa is Namibia’s biggest trading partner the Namibian economy relies quite strongly on goods and services supplied from there.
“Although the outlook is a little bleak we are not without hope. It also does not mean that the Namibian economic recovery is completely stalled, but it rather tells us that we must re-align our fiscal plans to adapt to the situation.”
Mr. Schlettwein said the secondary effects of the spill-over will dampen Namibia’s hopes to make a speedy recovery.