Namibia’s economy is expected to have recorded a strong growth on an annual basis in the first quarter on the back of increased mining output and improved tourist arrivals.
A report by PSG Namibia predicted growth to have accelerated to 3.5% in 2022, up from 2.4% in 2021, partially reflecting base effects due to disappointing economic activity in Q1 2021 and a rebounding mining sector.
The report also noted that low interest rates and the pent-up demand have driven robust demand for new passenger vehicles over the past year, but this momentum could slow now as interest rates shoot up and savings are depleted.
The report, which comes ahead of Namibia’s Q1 2022 GDP growth release on June 30, said the private sector credit extension (PSCE) growth ticked higher by 2.1% y-o-y in Q1 2022 compared to a growth of 2.0% y-o-y in Q1 2021.
PSCE growth has not yet recovered to its pre-pandemic pace and also remains well below inflation, although the latest figures show signs of a tentative modest recovery in credit demand taking shape this year.
According to the Namibia Statistics Agency, the average bed occupancy index for Q1 2022 grew by 12.3% y-o-y.
“Despite some relaxation in global travel restrictions lately, occupancy in the travel & tourism industry is about two-thirds of pre-pandemic levels,” said the NSA.
The average beverage composite index broadened by 15.2% y-o-y in Q1, thanks
mainly to the relaxation of pandemic-related alcohol sales restrictions in Namibia and South Africa over the past year.
SA is the main export destination of Namibian beer. Meanwhile, the average electricity sales composite index surged higher by 16.8% y-o-y in Q1.
Locally generated electricity has been boosted by good rains in Angola, resulting in higher flow at the Ruacana hydroelectric power plant as well as an increase in generation from independent solar-power producers.
Meanwhile, mining output bounced back strongly at the start of 2022 with average mining production index rising by 24.5% y-o-y in Q1 2022 compared with a contraction of 24.6% y-o-y in Q1 2021.
Diamond, gold, and zinc mining production have risen strongly on an annual basis from a low base set last year, while uranium output decreased y-o-y in Q1 2022 due to water supply issues.
The average livestock marketed index increased by 26.2% y-o-y in Q1 2022, following a large decline in the index of 26.3% in Q1 2021.
Livestock marketing and exports have improved lately, following successive years of devastating drought that depleted livestock populations, thanks in part to better rainfall and higher meat prices.
However, higher inflation, owing to supply constraints caused by the Russia-Ukraine war and the ongoing global pandemic, will put a damper on growth via weaker consumer spending.
“The possibilities of an escalation in the Ukrainian conflict and prolonged lockdowns in China are significant downside risks to our forecast,” said PSG.
