10 July 2018

Namibia: Slow Growth Expected for Primary Industries

THE primary industries' sector is expected to experience slow growth during 2018 as a result of lower growth rates across all major sectors.

This was outlined in the Bank of Namibia's economic outlook for July 2018.

Growth for the primary industries is expected to slow down to 6,3% in 2018, compared to a robust growth of 10,7% in 2017. The industry is, however, expected to further decline to 1,8% in 2019.

The expected slowdown during 2018 is reflected in reduced growth rates for most primary sectors, including agriculture, diamond mining and metal ores.

SECTOR PERFORMANCE

The growth for the agricultural sector is expected to normalise in 2018, following high growth the preceding year. That sector is projected to grow by 3,1% and 4,1% in 2018 and 2019, respectively, showing a marked slowdown from a 12,7% growth rate in 2017.

"The moderation in these growth rates can be considered as normalisation, given the exceptionally high growth in 2017 that was boosted by low base effects after poor performances during 2015 and 2016," said the report.

Diamond mining is also estimated to maintain a high growth level during 2018 before contracting in 2019 due to the depletion of onshore diamond deposits. The sector's projected growth is 10,9% in 2018, which is reasonably high, despite a slowdown from 12% in 2017.

The diamond sector is, however, expected to contract by 5,3% in 2019 due to lower production from onshore mines during that year.

"In this regard, the Elizabeth Bay mine near Lüderitz is expected to close down because it has not generated any profits in recent years. Debmarine Namibia is expected to increase output significantly in the medium term, keeping the growth outlook for diamond mining positive from 2021, going forward," stated the report.

Meanwhile, the uranium mining sector is projected to moderately grow by 7,5% during 2018 before accelerating by 15,6% in 2019 as output from the Husab mine increases. The rate was, however, lower than the 23,4% recorded in 2017.

"The estimated slowdown during 2018 is attributed to the halting of production at the Langer Heinrich uranium mine, which has been put under care and maintenance. Going forward, the uranium sector is expected to yield robust growth, largely as the Husab mine increases production to reach its production capacity in the medium term," noted the report.

Growth for the metal ores sector is projected at 7,6% and 5,2% in 2018 and 2019, respectively, which is a slowdown from 9,9% recorded in 2017.

Slower growth rates are based on the fact that various sub-sectors such as gold and copper are currently operating around their design capacities, leaving the zinc and lead sub-sector to drive this growth during 2018 and 2019.

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