Yes, it is a recession, says BoN

ECONOMIC growth in Namibia will likely plunge to minus 0,6 per cent in 2009, the Bank of Namibia (BoN), till now fostering hopes that the country won’t fall victim to recession this year, had to announce yesterday.

Diamond production is expected to contract by 63 per cent and tourism by 20 per cent.Government’s nearly N$26 billion expenditure budget, of which N$3,9 billion is meant for capital projects, won’t be sufficient and timely enough to stop the economy from sliding into negative growth.The impact on the deficit and unemployment is unknown – but it is bound to be significant.This is just part of the bleak picture BoN Governor Tom Alweendo painted when he told the media that the central bank had to lower its growth forecast again – barely two months after the last time and the third time this year.In February the BoN still expected a gross domestic product (GDP) growth of 1,1 per cent for 2009, by April they were bargaining on 0,4 per cent.The latest adjustment means that economic growth prospects have tumbled by nearly two percentage points in about four months.Cornered about whether the BoN now believes Namibia is in a recession, Governor Alweendo said there are two definitions of a recession.The popular one is that a country is in recession if it experiences two consecutive quarters on negative economic growth.’If you go by that definition, then certainly we are,’ he said.The Namibian first reported on April 16 that Namibia will be hit by a recession. However, Alweendo said there is also a wider definition, describing a recession as a country suffering from a significant economic slowdown and job losses.The Governor, clearly hesitant to label Namibia with the R-word, said he feels the latter is a more suitable definition, given that growth locally is ‘really volatile’.He doesn’t regard the economic slowdown as significant and exact figures on unemployment are available, Alweendo said.According to the Africa Competitiveness Report released by the World Economic Forum (WEF) last week, the unemployment rate in Namibia is as high as 54 per cent if ‘discouraged people’, those who are currently jobless and who have stopped looking for work, are included.Data released by the Central Bureau of Statistics (CBS) recently showed that Namibia was already in recession during the second and third quarters of last year, when growth shrunk by 3,7 per cent and 4,6 per cent respectively.Local economists have for some time warned that Namibia is heading for recession, forecasting growth of between minus one per cent and minus 1,6 per cent this year.Asked whether the BoN expects to lower its estimate later in the year, Alweendo said he thinks Namibia has seen the worst.’But you never know,’ he added.The BoN is cautiously optimistic about next year.’A recovery is possible for 2010, however, the balance of risks remains tilted to the downside,’ its economic outlook mid-year revision states.jo-mare@namibian.com.na