19. June 2009

Namibia: Recession Not 'Full-Blown' - Tweya

GOVERNMENT says it will keep the economy afloat despite warnings from the Bank of Namibia (BoN), Central Bureau of Statistics (CBS) and a string of independent experts that growth will contract this year.

"We will avoid a full-blown recession, even though we are in a recession," Deputy Finance Minister Tjekero Tweya told Parliament yesterday afternoon.

Tweya was responding to DTA Member of Parliament McHenry Venaani's question on whether a recession has hit the country or not.

The Deputy Minister said the expansionary budget and "significant" tax concessions, which complement the expansionary measures in the 2008 budget, "are aimed not only at counteracting the crisis, but also at strengthening the foundations of future economic growth while at the same time increasing the welfare conditions of the Namibian citizens".

The BoN isn't quite as confident.

Announcing that economic growth is forecast to drop to minus 0,6 per cent this year, BoN Governor Tom Alweendo on Wednesday said: "It is not expected that the significant expansionary fiscal policy will be sufficient and timely enough to offset the relapse in some sectors, such as tourism and related industries that are now expected to contract by as much as 20 per cent."

Motivating his optimism, Tweya said the mining sector, which was hit the hardest, "seems to be recovering slightly".

The BoN painted a different picture.

They expect diamond production to tumble by 63 per cent this year, with very little hope of recovery before the end of 2010. Despite the boom in the uranium sector, the BoN forecasts that the non-diamond mining and quarrying sector will grow by only two per cent this year.

The big slump in the mining sector as a whole will see Namibia's entire primary-industries sector contracting by 27 per cent.

Tweya said economic analysts "allege" that Namibia is in recession, based on "quarterly gross domestic product (GDP) data for 2008".

The CBS data shows two quarters of "slightly negative growth", but indicate that the Namibian economy returned to positive domain in the fourth quarter of last year, he said.

"(This renders) the arguments of a full-blown recession unwarranted."

According to the CBS, the GDP grew by minus 3,7 per cent and minus 4,6 per cent respectively in the second and third quarter of 2008. The preliminary stats show that, adjusted on a seasonable basis, the economy grew by 0,6 per cent in the last quarter.

No figures for the first quarter of 2009 are available yet.

Tweya furthermore said that Government looks at two different sets of indicators when monitoring the economy.

The Ministry of Finance takes Government's cash flow into account, as well as the general level of economic activity in the various sectors. For the latter the Ministry relies on the BoN's quarterly bulletins.

As far as cash flow is concerned, a higher than expected fiscal revenue was witnessed between January to April.

Relevant Links Southern Africa Namibia Business "If fiscal revenue is above forecasts, it means that companies and individuals are paying more in taxes on profits, income or consumption, which in turn suggests that the economy is not performing much below our initial forecasts," Tweya said.

Their report on sectoral performance "suggests that although the Namibian economy might be growing slower than initially estimated, thanks to Government intervention and the performance of the other economic sectors, it will avoid a full-blown recession," he said.

On the up side are higher electricity consumption and cement imports, increased company registrations and a rise in business credit extension.

On the down side, however, are a decline in car sales, as well as a slump in rail cargo and port operations at Walvis Bay and L├╝deritz, Tweya said. (the namibian)


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