This was as the primary sectors in particular struggled. Analysts were hoping for a stronger growth number during the fourth quarter.
The World Bank’s Global Economic Prospects January 2015 report calculated an average economic growth of 5.1 per cent p.a. in Namibia during 2011-13, slipping to an estimated 4.2 per cent last year.
The IJG Business Climate Index (BCI) for Namibia increased again during November 2014 following a significant increase recorded in the preceding month on the back of a combination of factors. This stoked optimism about economic growth during Q4. The Institute for Public Policy Research (IPPR) attributed the continued improvement during November to “a generally buoyant local economy” as well as falling oil prices.
Looking ahead, the World Bank now projects average economic growth of just 4.1 per cent p.a. during 2015-17, alongside a current account deficit equal to more than 5 per cent of GDP during the three-year period. However, the report does not discuss the 2015-17 growth projections for Namibia in any detail.
We believe that the World Bank took many factors into account in projecting the softer numbers for the coming three years:
- downside risk to consumer spending from tightening monetary policy;
- the lingering impact of current dry weather and several droughts in recent years;
- base effects impacting growth in the construction sector;
- weak economic growth prospects in key export client South Africa; and
- expectations of further weakness in the exchange rate.
The Famine Early Warning Systems Network (FEWS NET) published a food security alert for Southern Africa on January 5 due to poor rainfall levels during the first half of the 2014/15 agricultural season. While weak rains were also seen early in the previous crop year, above-average precipitation across Southern Africa during Q1 of 2014 offset the deficit, according to FEWS NET.
This year, however, national level forecasts indicate an increased probability of below-average rainfall across the region. The pessimism is partly as a result of the expected impact of both El Niño and a negative subtropical Indian Ocean Dipole in the region. Forecasts made in mid-December 2014 pointed to below-average rainfall during January and February in Namibia, according to the World Food Programme (WFP).
The Assessment Capacities Project (ACAPS) believes that half a million Namibian’s were at risk of food insecurity during H2 of 2014 and that more than 100,000 people are in need of food assistance at the start of 2015. Indeed, Namibia’s National Early Warning and Food Information Unit (NEWFIU) sees household grain stocks running out by the end of January in the country’s northern areas.
Minister of Agriculture, Water and Forestry John Mutorwa indicated to New Era that he is concerned about the country’s rainfall situation but that he is “hopeful” that rains will come by the end of January. “If we do not get good rains government will step in,” added the minister. The government is in the process of building more grain silos though this will not have a noticeable impact in the near term.
Although agriculture accounted for only about 5 per cent of GDP last year, some two-thirds of the Namibian population is somehow dependent on farming for their livelihoods. This also implies that hundreds of thousands of Namibians could be dependent on emergency relief and other interventions on the part of the state should Mutorwa’s hopes come to nought.
The country’s fiscal balance has deteriorated over the past two years after recovering in 2012/13 from a big deficit during the drought-stricken 2011/12 financial year. Our projections point to another big shortfall in state funding this year and an accompanied rise in government debt.
*Christie Viljoen is senior economist at NKC Independent Economists