Mining no longer mainstay of economy

The mining sector no longer single-handedly carries the economy, the latest gross domestic product (GDP) figures show. Instead, other sectors of the economy are aiding growth, Cirrus Capital said.

This follows the release of the second quarter GDP figures by the Namibia Statistics Agency (NSA).

According to Cirrus Capital, Namibia’s nominal GDP growth of 9% marks an 11th consecutive quarter of nominal growth in excess of 8.5%. The continued high nominal GDP growth is materially improving many of the country’s key metrics.

“Although real GDP growth has slowed, it is important to bear in mind that the 3.5% of the second quarter of 2024 comes despite a contraction in the mining sector. Overall GDP growth had largely been driven by double digit growth in the mining sector since the third quarter of 2021,” Cirrus Capital said.

Activity from the last two quarters also showed that mining’s impact on the economy, while still significant, was starting to wane.

“However, the last two GDP prints show that growth is broadening across the economy and is no longer being driven by mineral output. This is an encouraging sign of the development of Namibia’s economic recovery, which was initially highly concentrated,” Cirrus Capital said.

The other sectors were also expected to help grow the economy, it noted.

“While the second quarter of 2024’s print was largely carried by the financial and insurance services with a surprisingly strong print, we expect to see continued growth across much of the economy, including the tertiary industries,” the company said.

“This is to be supported by easing financial conditions, particularly lower interest rates and personal income tax adjustments. Given the marginal propensity to consume, these should benefit value added tax collections as well,” it added.

Cirrus Capital said increased mineral exploration would help carry the economy over the short- to medium-term. “The outlook for medium-term growth remains encouraging, particularly given the scope for mineral production, the improving fiscal metrics and increase in hydrocarbon exploration activity."