Recession ‘worse than feared’

ECONOMIC growth prospects for Namibia dimmed even more this week with the latest diamond production and sales figures alerting economists to a worse-than-expected recession this year.

Old Mutual Namibia Group Economist Robin Sherbourne reacted to the low production and ‘extremely weak’ sales figures of the first quarter by revising his forecast for total diamond production this year downwards from one million carats to 900 000 carats.He told The Namibian that he is busy revising his forecast for economic growth too, ‘but my hunch is that the final figure for 2009 will come down further’.Sherbourne earlier predicted that Namibia’s gross domestic product (GDP) growth for this year will be minus 1,6 per cent, technically plunging the country into a recession.South Africans were shocked this week when their GDP at market prices for the first quarter of 2009 contracted by minus 6,4 per cent on a quarter-on-quarter seasonally adjusted annualised basis from minus 1,8 per cent in the fourth quarter of last year, ushering in the country’s first recession in 17 years. The collapsed mining and manufacturing sectors were the main culprits.Unfortunately, or fortunately, Namibia doesn’t keep any quarterly data on the economy, Sherbourne said.He was joined by Simonis Storm Securities (SSS) Research Director Emile van Zyl, saying: ‘We won’t see such a figure. Unfortunately we will only see the 2009 year figure towards the middle of 2010 and hopefully it won’t be as negative.’ His growth expectations aren’t quite as gloomy, with a forecast of between zero per cent and minus one per cent for the entire 2009.’Our situation in Namibia is slightly different from that in South Africa. Our manufacturing sector is much smaller and mainly focuses on brewing, dairy products and smelting. Although nobody is safe from the financial crisis, we are still seeing growth in these sectors,’ Van Zyl said.Furthermore, Namibia has enormous public and financial sectors, plus Government intends spending big through this year’s budget stimulus and most parastatals are busy with huge capital projects.’Experience has shown that a few huge projects can have a significant impact on economic growth in Namibia. The coming years will be no exception,’ Van Zyl said.Lower interest rates and fuel prices should soften the blow to the economy further, he feels.The tourism and diamond industries will suffer the most. And while the local retail sector has flourished up to now, mainly because of Angolan support, a stronger Namibia dollar against a US dollar will certainly dent performance.Economist Namene Kalili agreed. Although he expects that Namibia enjoyed a good first quarter, he believes it will be short-lived.’I see the retail sector struggling in the second sector, fuel prices putting upward pressure on inflation, a stronger rand hurting exports, while consumer demand remains subdued,’ he said.’Therefore the negative growth in South Africa will spill into Namibia in the second quarter and possibly the third quarter as well,’ Kalili predicts.The Bank of Namibia (BoN) official growth forecast for 2009 still stands at 0,4 per cent. However, the central bank earlier warned that it might adjust it again later in the year and that the figure might then be lower.jo-mare@namibian.com.na