Recession: Are we or aren’t we?

TO be or not to be… in recession, that is. That seems to be the question wherever two or more businesspeople gather in Namibia nowadays.

Yesterday, at the tenth anniversary of the Namibian Economic Society (NES), was no exception.This time it was Tarah Shaanika, Chief Executive Officer (CEO) of the Namibian Chamber of Commerce and Industry (NCCI), who added to the debate.The NCCI expects the Namibian economy to grow by 1,5 per cent this year, Shaanika said. He immediately added that the Chamber was probably ‘a bit optimistic’ or even ‘bullish’ in its outlook – the rosiest prediction so far this year.The closest to this was the Bank of Namibia’s (BoN) estimate of 1,1 per cent in February. However, the BoN recently adjusted its expected gross domestic product (GDP) growth to 0,4 per cent, adding that the economic meltdown might force them to lower this figure even more later in the year.Investment House Namibia (IHN) summarises the crux of the debate aptly in its latest Marco-Economic Outlook: Namibia won’t know whether it is in a recession or not, because the country has no reliable quarterly data.The standard definition for a recession is negative growth in the GDP for two or more consecutive quarters.IHN points out that this definition is unpopular with most economists for two main reasons: it ignores any changes in the unemployment rate or consumer confidence.’In the Namibian context, due to the lack of reliable quarterly data, this definition won’t adequately indicate to us if Namibia is currently in a recession,’ IHN maintains.’Is Namibia heading for a recession in 2009?’Yes, it might as well head for a recession if the annual GDP growth turns out to be contracting/negative.’For all intents and purposes a negative growth in the annual real GDP could include two consecutive quarters of negative growth -without us knowing it,’ IHN says.The stockbrokers believe the Namibian economy will shrink by minus 0,4 per cent this year.’Namibia’s real economic growth peaked in 2004 at 12,3 per cent, mainly due to a strong performance in the diamond sector. Ironically it is the same sector that is driving our economic growth into negative territory in 2009,’ the firm says.IHN is not alone in its opinion that Namibia is heading for a recession.Old Mutual Group Economist Robin Sherbourne predicts that local economic growth will plunge to minus 1,6 per cent this year.Dr Omu Kakujaha-Matundu, Deputy Dean of Economics and Management at the University of Namibia (Unam), even takes it a step further.’I think we are almost there or we are in recession already,’ Dr Kakujaha-Matundu, also a member of the BoN Board, recently told The Namibian.Backing predictions of gloom are the latest estimates by the International Monetary Fund (IMF).In April the Fund said it now expects economic growth in South Africa to contract to minus 0,3 per cent this year. Growth for Southern Africa will probably slow down to minus 1,7 per cent.jo-mare@namibian.com.na