Global and regional prospects 7 6.5 2017 (Jan16) 6.2 2017 - - PDF document

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Global and regional prospects 7 6.5 2017 (Jan16) 6.2 2017 - - PDF document

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19/09/2017 Global and regional prospects 7 6.5 2017 (Jan16) 6.2 2017 (Apr16) 6 2017 (Jul16) 2017 (Oct16) 4.7 5 2017 (Jan17) 2017 (Apr17) 4 3.6 3.5 By Klaus Schade 2017 (Jul17) 2.7 2.6 3 2.1 1.9 1.8 1.7 1.7 2 19 September

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19/09/2017 1

By Klaus Schade 19 September 2017

Institute for Public Policy Research

Global and regional prospects

3.6 1.7 4.7 6.2 1.7 2.6 3.5 1.9 2.7 6.5 1.8 2.1 1 2 3 4 5 6 7 World Euro Area Sub-Saharan Africa Developing Asia Germany USA 2017 (Jan16) 2017 (Apr16) 2017 (Jul16) 2017 (Oct16) 2017 (Jan17) 2017 (Apr17) 2017 (Jul17)

19 September 2017 economist@ippr.org.na 2

Nigeria – quarterly GDP y-o-y

4.0 2.4 2.5 2.1

  • 0.7
  • 1.5
  • 2.3
  • 1.7
  • 0.9

0.5

  • 3
  • 2
  • 1

1 2 3 4 q1 15 q2 15 q3 15 q4 15 q1 16 q2 16 q3 16 q4 16 q1 17 q2 17

19 September 2017 economist@ippr.org.na 3

South Africa – quarterly GDP q-o-q

1.9

  • 1.8

0.4 0.5

  • 1.5

3.1 0.4

  • 0.3
  • 0.6

2.5

  • 2
  • 1

1 2 3 4 q1 15 q2 15 q3 15 q4 15 q1 16 q2 16 q3 16 q4 16 q1 17 q2 17

19 September 2017 economist@ippr.org.na 4

Global & regional prospects

IMF WEO: 2017 – 3.5%, 2018 – 3.6% No strong improvement India emerges as driver of economic growth Brexit uncertainties remain Policy uncertainties in the USA Geopolitical tensions Regional prospects Nigeria recorded positive GDP growth in Q2 2017 after five quarters of contraction RSA 2017 – 1.0% instead of 0.8%, 2018 – 1.2% instead of 1.6%. RSA moved out of technical recession in Q2 2017. Exports are doing well. Political uncertainties in almost all Southern African countries except Botswana & Namibia. RSA political vacuum deters much needed impetus for region Downgrade to below investment rating in March 2017 - no discernible impact on exchange rate. RSA economic performance impacts on SACU CRP and hence transfers to BLNS

19 September 2017 economist@ippr.org.na 5

Namibia – GDP growth 2008-16

19 September 2017 economist@ippr.org.na 6

  • 35
  • 30
  • 25
  • 20
  • 15
  • 10
  • 5

5 10 15 20 25 30 35 40 45 2008 2009 2010 2011 2012 2013 2014 2015 2016

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19/09/2017 2

Namibia – GDP growth y-o-y

19 September 2017 economist@ippr.org.na 7

6.3 8.6 6.3 4.7 4.1

  • 1.9
  • 1.2
  • 1.4
  • 2.7
  • 4
  • 2

2 4 6 8 10 q1 15 q2 15 q3 15 q4 15 q1 16 q2 16 q3 16 q4 16 q1 17

Quarterly GDP growth – selected sectors

  • 4.3

5.3 13.7

  • 13.0

10.5

  • 2.2
  • 19.5
  • 5.6

3.2 16.8 11.3

  • 2.6
  • 4.5

1.8

  • 10.7
  • 15.9
  • 34.9
  • 29.5
  • 37.7
  • 44.9
  • 50
  • 40
  • 30
  • 20
  • 10

10 20 1q16 2q16 3q16 4q16 1q17 Agriculture Mining and quarrying Manufacturing Construction

19 September 2017 economist@ippr.org.na 8

Change in Inventories – NAD million

1,450 1,763

  • 1,129 -958
  • 291

1,044

  • 1,785

259 779 2,277

  • 2,000
  • 1,500
  • 1,000
  • 500

500 1,000 1,500 2,000 2,500 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

19 September 2017 economist@ippr.org.na 9

Distribution of GDP in percent

38 39 40 41 42 43 44 45 46 47 48 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Compensation of employees Net operating surplus

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Labour market trends

27.5 56.3 37.8 26.2 28.3 22.7 52.2 34.0 43.4 39.2 30.3 29.8 58.5 10 20 30 40 50 60 70 2012 2013 2014 2016

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Job losses by sector

  • 74,074
  • 31,607
  • 11,629
  • 7,944
  • 4,390
  • 80,000
  • 70,000
  • 60,000
  • 50,000
  • 40,000
  • 30,000
  • 20,000
  • 10,000

Agriculture & Fishing Wholesale and retail trade Public admin. Private hhd Transport and storage

19 September 2017 economist@ippr.org.na 12

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19/09/2017 3

Job losses by region

  • 22,794
  • 8,730
  • 7,564
  • 6,919
  • 25,000
  • 20,000
  • 15,000
  • 10,000
  • 5,000

Omusati Kunene Ohangwena Oshikoto

19 September 2017 economist@ippr.org.na 13

External trade

  • 7,561
  • 14,244
  • 5,894
  • 11,641
  • 11,016
  • 7,917
  • 11,420
  • 4,885
  • 6,193
  • 15,000
  • 10,000
  • 5,000

5,000 10,000 15,000 20,000 25,000 30,000 Q1 2014 Q2 2014 Q3 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Imports Exports Trade balance

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Main exports

10 20 30 40 50 Q1 14 Q2 14 Q3 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Diamonds Fish Copper ore Copper cathodes Zinc and articles thereof Live animals

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Main imports

5 10 15 20 Q1 14 Q2 14 Q3 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Mineral fuels & oil Vehicles Boilers, machinery etc Electrical machinery & equipm. Fodder

19 September 2017 economist@ippr.org.na 16

Prospects – primary sector

Agricultural sector doing well this year (>10%)

Forecast: Average to above-average rainfall However, rainfall patterns unpredictable

Mining – better performance this and next year expected:

Diamond mining expected to increase with new

commissioned exploration vessel

Zinc & Copper prices increased due to demand, but could

result in return to production of mothballed mines elsewhere

Uranium: limited impact of Husab expected this year, but

production increase in 2018. Full production?

Husab at full production second largest uranium mine

  • globally. Hence full production will have impact on global

prices (remain currently at very low levels) and hence on production at Roessing and Langer Heinrich

19 September 2017 economist@ippr.org.na 17

Prospects – secondary sector

Restocking of livestock could reduce livestock numbers sold to

  • abattoirs. However, record exports of live animals in Q2 2017.

Beverage production expected to increase due to improved water supply Construction-related manufacturing activities will remain under pressure (metal fabrication, cement, etc.) Construction: further contraction expected, since budget cuts will be felt this year. Completion of Neckartal dam and WB port extension next year. SADC Gateway port construction stretched over longer period of time

Capital investment by SoEs hampered by Government’s fiscal stance

Mineral processing, diamond processing could benefit from increased mineral production Import of raw material for value-addition in Namibia: frozen pilchard, milk powder, mineral ores etc. Electricity – Refit programme going to add 55MW by end of 2017 to domestic supply

19 September 2017 economist@ippr.org.na 18

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Prospects – Tertiary sector

Wholesale and retail trade affected by retrenchments in construction and related industries, but benefited from additional demand from subsistence farmers & families. Tourism expected to perform well despite currency appreciation

  • ver past 18 months and despite drop in shopping tourists from

Angola.

Increased insecurity in other regions – Turkey, North Africa, etc. Additional airlines expected to increase number of visitors. More important: Length of stay and daily expenditure.

Transport affected by declining demand from construction, but benefiting from increased mining output. Transit shipments affected by demand from Angola, restrictions on transportation

  • f certain goods in Zambia, weak performance of RSA economy.

Professional services linked to construction face head winds

19 September 2017 economist@ippr.org.na 19

Prospects – Labour market

Recovery in subsistence agriculture expected owing to good rainfall, except in Kunene north Tourism (hotels & restaurants, transport and related services) create more jobs In contrast, substantial job losses in construction and related industries Impact on wholesale and retail trade sector

19 September 2017 economist@ippr.org.na 20

Namibia policy environment

Ongoing review of NIPA by MITSMED in close consultations with private sector -> positive NEEEF – review is addressing areas of most concern to private sector such as ownership pillar Draft Rent Bill can impact on the construction of new houses and

  • ffices

Procurement Act could have positive impact on demand for domestically produced goods and services and hence support domestic economic growth Private sector could follow with stronger emphasis on local procurement and identification of goods and services that could be produced in Namibia Short-term fiscal measures in right direction, but we can’t shy away from structural issues such as bloated public service and non- performing SoEs -> need to be addressed to ensure sustainable growth and job creation. Current steps taken regarding SoEs point n the right direction. Moody’s downgrading: Impact remains to be seen, since Fitch has so far maintained the rating. Experiences show that upgrade will take time.

19 September 2017 economist@ippr.org.na 21

Thank you for your attention Please visit IPPR’s web site for this presentation and other reports: www.ippr.org.na

19 September 2017 22 economist@ippr.org.na