Low commodity prices a threat to economy: BoN

Low commodity prices a threat to economy: BoN NAMPA

Low commodity prices and global uncertainty emanating from trade relations between the United States and its trading partners remain risks for Namibia’s economy.

The Economic Outlook Update issued by the Bank of Namibia (BoN) on Tuesday said despite a recent uptick in the price of uranium, the potential reverse could exert pressure on Namibia’s account balance and international reserves.

“These risks to the domestic economy remain definite since the last Economic Outlook Update in November 2016,” it said, adding that Namibia’s agriculture sector was also on the line.

A recent armyworm outbreak in northern Namibia and elsewhere in Africa was a major risk to growth in the agricultural sector, the central bank said.

The caterpillars have been devastating maize fields at the Etunda Green Scheme Irrigation Project in the Omusati Region since January.

The project experienced an American bollworm outbreak in November last year, and armyworms emerged just as the bollworm pest subsided.

The Update estimated Namibia’s real gross domestic product (GDP) growth at 1% in 2016 and projected increases to 2.9% and 3.8% in 2017 and 2018 respectively.

The growth estimate for 2016 is a downward revision of an estimate of 2.5% in November 2016.

This was mainly attributed to a deeper than expected contraction in sectors such as diamond mining and construction.

There were some improvements in the uranium-mining subsector and a lesser contraction in the agriculture sector but these developments were not strong enough to mitigate a slowdown in the overall growth estimate for 2016.

Over the medium term, growth will mainly be supported by anticipated recovery in agriculture and diamond mining as well as improved growth in uranium mining and the transport and communication sectors.