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Namibia: Recession Hits Namibia

The Namibian economy has entered into a full recession after the Namibia Statistics Agency (NSA) announced on Thursday that the economy had contracted by 2,7 percent in the first quarter of 2017 compared to a 4,1 percent growth recorded in the corresponding quarter of 2016.
The poor performance was mainly attributed to the construction, manufacturing, wholesale and retail trade as well as hotels and restaurants sectors that contracted by 44,9 percent, 10,7 percent, 7,4 percent and 9,3 percent in real value added, respectively.
FNB Namibia Holdings Market Research Manager, Daniel Kavishe, confirmed that Namibia was in full recession. “It’s a proper recession. We are in a recession,” he said. “We have recorded negative growth in four quarters.”
Kavishe said the uranium industry had not performed as expected. He warned that a continued downturn may affect Government tax generation, which may in turn force treasury to further cut spending.
The FNB economist further said that although Namibia has maintained its Fitch investment rating, this could change during the next review if the economy continues to slow down.
He noted that the current slowdown has led many companies to stop hiring workers, which he fears may worsen unemployment.
Ngoni Bopoto, a Research Analyst at Namibia Equity Brokers, further confirmed that Namibia was now in full recession.
“Since a technical recession is defined as two consecutive quarters of contraction, the economy has been in recession since Q2 16 and will remain in recession until we get a positive quarterly GDP growth number.  We have been in recession for the last four quarters already,” Bopoto said.
“The numbers feature revisions for all four quarters of the 2016 calendar year (-1,4 percent from -3,1 percent in fourth quarter of 2016), which implies that preliminary GDP figures presented earlier this year will most likely be revised downwards to reflect a contraction in 2016,” he added.
Bopoto said the latest data by NSA shows that 2016 was an extremely challenging fiscal year.
“We remain of the opinion that while the outlook is precarious, second quarter numbers will most likely show an improvement aided by renewed focus in the new fiscal year, continued recovery in diamond mining and agriculture, prospects of improved SACU receipts and statistical factors owing to a low base,” he said.
Cirrus Capital‏ said on Twitter that the construction sector collapse is a crisis. “We estimate 36,000 jobs will be lost in two years.”
Economist Rowland Brown said it was time to drop the euphemism of a “technical recession” and “call this what it is”.
Analyst Dylan van Wyk also said on Twitter that the latest GDP figures show that Namibia was “far from being just a technical recession anymore”.
In his report, Namibia Statistics Agency Statistician General, Alex Shimuafeni, said slower growths were observed in sectors such as financial intermediation, transport and communications and fishing sectors that registered 0,1 percent, 0,7 percent and 4,6 percent in real value added, respectively.
He said financial intermediation, public administration and defence and health sectors all recorded slower growths in real value added of 0,1 percent, 0,7 percent and 7,1 percent in the first quarter of 2017 compared to strong growths of 3,6 percent, 8,2 percent and 12,5 percent, respectively in the corresponding quarter of 2016.
“In contrast to the slow growth, sectors such as agriculture, mining and quarrying recorded double-digit growth of 10,5 percent and 16,8 percent compared to the contractions recorded in the corresponding period,” he said.
In addition, the water and electricity sector also posted strong growths of 6,1 percent compared to a marginal growth of 0,3 percent in real value added registered in the same quarter of 2016.
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