BON anticipates significant economic growth in 2022

Tujoromajo Kasuto

NAMIBIA’S economic performance was expected to improve slightly during 2021 and improve further in 2022, supported by better growth for the mining industry and most tertiary industries, Bank of Namibia’s (BON) economic outlook for December 2021 is revealing.

The domestic economy is projected to grow by 1.5 percent and by 3.3 percent in 2021 and 2022 respectively, representing an improvement from 8.5 percent contraction in 2020. The latest projection of 1.5 percent growth for 2021 represents a marginal improvement, compared to 1.4 percent published in the August 2021 Economic Outlook.

Risks to domestic growth remain dominated by the impact of the Covid-19 pandemic, but also include persistently low international prices for some of Namibia’s export commodities. These are due to travel restrictions that are still in place for many countries, exacerbated by new waves of coronavirus infections, vaccine hesitancy and the pace of vaccinations in Namibia.

The latest variant known as Omicron, has led to tighter travel restrictions, especially affecting Southern African countries. New waves were reported earlier in China and in Europe, which are some of Namibia’s major trading partners. Other notable risks to domestic growth outlook, include low international prices for some of Namibia’s export commodities such as uranium and climatic swings.

Meanwhile in the Real Sector, growth in agriculture, forestry and fishing is expected to remain in contraction in 2021, but to turn positive over the forecasting period. Growth in livestock farming is expected to remain depressed due to low marketing activity. Average to above-average rainfall (but short-lived) is expected for the upcoming rain season, as predicted by the Namibia Meteorological Service.

The diamond mining sector is expected to register robust growth rates during the forecast period, especially during 2022 and 2023 when the new mining vessel comes into production. During 2021, diamond mining would have increased marginally as a result of additional production from Elizabeth Bay mine, which was placed under care and maintenance since 2019.
The uranium mining sector was anticipated to register an improved growth rate during 2021, following a contraction in 2020. All operational uranium mines are expected to increase production during the forecast period. Challenges from water supply constraints are expected to remain, but moderate compared to the year 2020.

Growth in metal ores is to be supported by higher output from the gold sub-sector, which is expected to offset lost production in zinc and copper subsectors. Gold has the largest weight in metal ores.
Overall, the domestic economy is expected to start with a gradual recovery during 2021, as most countries open their economies. The Covid-19 pandemic is expected to remain a health risk going forward. Therefore, BON is not expecting fast recoveries in sectors that depend on travelling i.e., hotels and restaurants and transport.


Related Posts