The Bank of Namibia this week drastically reduced its 2019 growth forecast by 2% from a positive growth projection of 0.3% in April to a contraction of 1.7% in June.
The central bank attributes the low growth projection to the devastating drought being experienced currently and the anticipated contractions in major sectors such as diamond mining and wholesale and retail trade.
According to the bank, an anticipated reduced contraction in the construction sector represents a reduced drag on overall growth when compared to the last two years, adding that the sectors' impact on overall growth will be offset by weaknesses in other sectors during 2019.
Deputy Governor of the Bank of Namibia, Ebson Uanguta said further risks to the domestic economic growth include a slow recovery in international commodity prices, particularly uranium and copper, as well as continuing trade tensions between the United States and China.
"The risks to the domestic economy growth outlook remain more pronounced in primary industries, with the persistently low international prices for uranium and copper, which may cause mines to either reduce output of completely cease production as their operations remain unprofitable. Furthermore, ongoing trade trade wars between the United States and China have potential to negatively affect demand for Namibian minerals and worsen the growth outlook.
Meanwhile, however the Bank of Namibia forecast the economy to recover with positive growth of 0.8% and 1.2% in 2020 and 2021, respectively.