Country Hotspots – September 2016
According to the international credit ratings institution, Fitch Rating Agency, Namibia’s economic outlook has been downgraded from stable to negative. This comes at the same time as a not-unexpected economic slowdown which has seen the country’s GDP contract by 1.2% in the second quarter of 2016.
Down from 7% growth in the same quarter of last year, this marks the first contraction of the Namibian GDP since the first quarter of 2013.
Negative growth in construction, mining, and public administration – all sectors which form a large portion of the GDP – precipitated the contraction and, compounded by an ailing commodities market, may continue to present the economy with obstacles to growth.
Despite the slowdown, sectors such as retail and wholesale trade managed to defy conventional wisdom, recording a growth rate of 9.6% even while consumer pockets could be expected to be tighter in the face of the quarter’s 6.7% inflation rate.
Attempting to cut costs in response to the ratings downgrade, the Namibian government has frozen all new tender awards, dampening the prospects for growth for the remainder of the financial year.