Namibia’s gross domestic product increased by 4.4% to N$181.9 billion in 2021 up from N$174.2 billion recorded in 2020, the Namibia Statistics Agency (NSA) agency said on Wednesday.
According to the NSA’s latest National Accounts, the growth was underpinned primary and tertiary industries where an increase in economic activities was observed in the mining and quarrying sector.
In real terms, the domestic economy rebounded to record a growth of 2.7% in 2021 relative to the contraction of 8% induced by the COVID-19 pandemic from a downturn in economic activities in 2020.
“Gradual opening of movement of people between countries has led to improved economic activities in ‘Hotels and Restaurants’ as well as ‘Transport and Storage’ sectors in the Tertiary Industries during the period under review posting positive growths of 8.8 percent and 2.2 percent in real value added, respectively,” said NSA Chief Executive Alex Shimuafeni.
In an analysis of the accounts, Theo Klein of Simonis Storm said the expansion was primarily supported by a 6.2% growth in the primary sector and a 1.9% growth in the tertiary sectors, whereas the secondary sector recorded a single digit contraction of 3.3% as opposed to double digit contractions in prior years.
Simonis highlights developments in consumption, investment, government expenditure and net exports (exports less imports), which are the main components of the country’s gross domestic product (GDP)
Consumption
Klein said total private consumption constituted 75.1% of GDP in 2021, making this a crucial component of economic growth in Namibia. Consumption spending mainly took place in the food, housing and education sectors during 2021.
“Given the rise in inflationary pressures experienced in 2022 for numerous reasons and tighter monetary policy like higher interest rates, there is concern that consumption spending will be under pressure and weigh on 2022 economic growth outcome.”
Investment
An annual growth of 14.3% in Gross Fixed Capital Formation (GFCF) was recorded in 2021 the Simonis Storm Economist said, coming in higher than the 13.4% recorded in 2020.
“Investment activity was mainly in the mining, financial services and manufacturing sectors during 2021. This is indicative of a recovery in demand for credit and investment activity which we expect should be positive for 2022 as well, given that private sector credit extension has been trending above 2021 levels YTD,” said Klein.
Government spending
He noted that total government spending stood at N$73.2 billion in 2021, down by 0.3% compared to expenditure levels of 2020.
“The decline in spending was primarily due to decreases in current transfers to households and non-profit institutions serving households (i.e. in kind transfers in the form of government spending on goods and services provided to households). Without the need for Covid-19 relief spending in 2022, government expenditure is expected to marginally rise from 2021 levels during 2022. Public wage increases would also lift total expenditure going forward,” said the analyst.
Net Exports
Imports increased by 20.2% y/y in 2021 compared to 2020, whereas exports decreased by 1.1% y/y in 2021 with exports coming in lower mainly due to a decline in the metal ores category.
Namibia has recorded a trade deficit each month averaging N$3.4 billion during the first half of 2022, despite a material improvement in mining production during the same time.
“We expect Namibia’s negative trade balance (net export component) to weigh on the GDP calculation during 2022,” said Simonis.
