Domestic economy needs to continue growing
The mining, agricultural, construction and manufacturing sectors recorded negative growth rates during the second quarter (Q2) of 2021.
PHILLEPUS UUSIKU
The domestic economy rebounded into a positive trajectory, recording a positive performance of 1.6% during the second quarter (Q2) of 2021 compared to a decline of 11.6% recorded in the corresponding quarter of 2020.
According to the Bank of Namibia (BoN) quarterly bulletin, improvements in the tertiary industry were mainly observed in sectors such as wholesale and retail trade, information and communication, and transport.
Real turnover in the wholesale and retail trade sector increased due to base effects, following the Covid-19 related lockdown measures instituted during the second quarter of 2020. The communication subsector continued to sustain the growth in the information and communication sector. Activity in the transport sector increased broadly as observed in road, rail and sea cargo volumes, the central bank pointed out.
The tourism sector, although remaining weak, regained some of the ground lost in 2020 owing to developments in the tourist arrivals and the vaccine rollout globally.
In contrast, the mining, agricultural, construction and manufacturing sectors continued to record negative growth. Activity in the mining sector slowed on the back of lower production registered in diamonds, uranium and zinc concentrate, BoN said.
Livestock marketing activity in the agricultural sector declined due to restocking by farmers. The construction sector slowed as both government and private construction works weakened. Similarly, manufacturing sector activity continued to be dragged down by lower throughput of basic metals, following the halt in production of refined zinc since May of 2020, BoN added.
Inflation
Namibia’s inflation rate rose during the second quarter of 2021, driven mainly by an increase in the inflation for housing, transport as well as food. Inflation picked up by 1.9 percentage points to 3.9% during the second quarter of 2021 compared to the corresponding quarter of 2020.
The rise in inflation was reflected in the transport, food and housing categories. Transport inflation rose on account of an increase in the international price of fuel, while the acceleration in the food inflation was driven by supply constraints particularly for meat. Furthermore, the rise in inflation for housing was driven by an increase in rental payment for dwelling subcategory, BoN said.
According to Simonis Storm economist Theo Klein, in order for the economy to recover the -8.5% economic loss in 2020 due to the pandemic, Q3 and Q4 in 2021 needs to grow by an average of 3.0% per quarter.
Current real gross domestic product (GDP) levels generated during 2021 comprises only 48.5% of 2020’s annual real GDP level. This means the economy is less than halfway in generating the same growth that was produced in 2020. More alarmingly, current real GDP levels are only 44.4% of the annual real GDP generated in 2019.
On a quarterly basis, real GDP increased by 3.7% in Q2. Excluding Q2 of 2020, 2021’s Q2 is the second worst Q2 GDP print since 2015, Klein said.
The domestic economy rebounded into a positive trajectory, recording a positive performance of 1.6% during the second quarter (Q2) of 2021 compared to a decline of 11.6% recorded in the corresponding quarter of 2020.
According to the Bank of Namibia (BoN) quarterly bulletin, improvements in the tertiary industry were mainly observed in sectors such as wholesale and retail trade, information and communication, and transport.
Real turnover in the wholesale and retail trade sector increased due to base effects, following the Covid-19 related lockdown measures instituted during the second quarter of 2020. The communication subsector continued to sustain the growth in the information and communication sector. Activity in the transport sector increased broadly as observed in road, rail and sea cargo volumes, the central bank pointed out.
The tourism sector, although remaining weak, regained some of the ground lost in 2020 owing to developments in the tourist arrivals and the vaccine rollout globally.
In contrast, the mining, agricultural, construction and manufacturing sectors continued to record negative growth. Activity in the mining sector slowed on the back of lower production registered in diamonds, uranium and zinc concentrate, BoN said.
Livestock marketing activity in the agricultural sector declined due to restocking by farmers. The construction sector slowed as both government and private construction works weakened. Similarly, manufacturing sector activity continued to be dragged down by lower throughput of basic metals, following the halt in production of refined zinc since May of 2020, BoN added.
Inflation
Namibia’s inflation rate rose during the second quarter of 2021, driven mainly by an increase in the inflation for housing, transport as well as food. Inflation picked up by 1.9 percentage points to 3.9% during the second quarter of 2021 compared to the corresponding quarter of 2020.
The rise in inflation was reflected in the transport, food and housing categories. Transport inflation rose on account of an increase in the international price of fuel, while the acceleration in the food inflation was driven by supply constraints particularly for meat. Furthermore, the rise in inflation for housing was driven by an increase in rental payment for dwelling subcategory, BoN said.
According to Simonis Storm economist Theo Klein, in order for the economy to recover the -8.5% economic loss in 2020 due to the pandemic, Q3 and Q4 in 2021 needs to grow by an average of 3.0% per quarter.
Current real gross domestic product (GDP) levels generated during 2021 comprises only 48.5% of 2020’s annual real GDP level. This means the economy is less than halfway in generating the same growth that was produced in 2020. More alarmingly, current real GDP levels are only 44.4% of the annual real GDP generated in 2019.
On a quarterly basis, real GDP increased by 3.7% in Q2. Excluding Q2 of 2020, 2021’s Q2 is the second worst Q2 GDP print since 2015, Klein said.
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