Executive summary
Namibia’s economic performance in the third quarter of 2023 exhibited a resilient upward trend in economic activities, with notable increases in mining and quarrying, agriculture and forestry, and transport and storage. However, certain sectors faced challenges despite the overall economic recovery. South Africa’s economic landscape in the third quarter of 2023 deteriorated, with notable declines in five key sectors. After two consecutive quarters of growth, South Africa’s Gross Domestic Product (GDP) contracted with the poor performance evenly spread between industries on the production side of the economy.
Analysis
Namibia
During the third quarter of 2023, the Namibian economy recorded a growth rate of 7.2% when compared to the 5.4% recorded in the corresponding quarter of 2022 (Figure 1). This quarter-on-quarter increase in economic performance was primarily driven by expansions in the following sectors.
- Mining and Quarrying: The mining and quarrying sector recorded robust growth, marking 51.7% surpassing the 30.6% growth recorded during the same period in 2022. This growth is primarily attributed to activities in the mining of metal ores, uranium mining, and sustained investments in mineral exploration as oil and gas exploration activities pick up pace.
- Agriculture and Forestry: The agriculture and forestry sector registered an increase of 19.9%. The upsurge was primarily attributed to the livestock farming subsector, which experienced a growth of 25.6%. The increase was associated with improved livestock marketing during the period under review.
- Transport and Storage: The transport and storage sector posted a growth of 8.8% during the quarter under review, compared to a decline of 5.0% that was recorded in the corresponding quarter of 2022. The strong performance in transport was attributed to an increase in passenger and aircraft movement due to improved activities related to tourism.
On the downside, certain sectors recorded declines:
- Construction Activities: The construction sector registered a significant decline, with real value-added contracting by 30.6%. This poor performance was particularly evident in government expenditure on construction, which posted a contraction of 51.8%. The decrease was mainly due to the reduction in government spending on construction related to transportation infrastructure projects
- Manufacturing: The manufacturing sector exhibited a notable decline of 8.7%, which marked a significant downturn from the 11.2% growth recorded in the second quarter of 2022. The performance in the sector was mainly driven by the basic non-ferrous metals subsector which registered a decline of 74.4%, due to the maintenance shutdown experienced
- Health: The health and social work sector witnessed a 4.0% decline in contrast to the 8.5% decrease noted in the corresponding quarter of 2022. This performance was attributed to a reduction in employee compensation, stemming from fewer employees coupled with a decline in spending on goods and services
South Africa
During the third quarter of 2023, South Africa’s real GDP exhibited a decline of 0.2%, marking a notable deterioration compared to the robust 1.8% growth recorded in the corresponding quarter of 2022 (Figure 1). This quarter-on-quarter decline in economic performance was primarily driven by contractions in the following sectors.
- Agriculture: The sector experienced a decline of 9.6% from a significant robust growth of 31.4% observed in the same quarter of 2022, negatively impacting GDP growth by -0.3%. This was primarily due to decreased economic activities reported for field crops, animal products, and horticulture products
- Manufacturing: The manufacturing sector exhibited a notable decline of 1.3%, which marked a significant downturn from the 1.6% growth recorded in the second quarter of 2022, contributing 0.1% to the overall GDP growth, with the food, beverages, and tobacco division making the largest contribution to the decrease in the third quarter
- Construction: During the second quarter of 2023, the industry saw a decline of 2,8% mainly due to decreases in residential buildings, non-residential buildings, and construction works
However, certain sectors recorded growth:
- The transport, storage, and communication: The industry recorded a growth rate of 0.9%, which, while positive, marked a deceleration compared to the 3.4% growth recorded in the corresponding quarter of 2022. The growth stemmed from increased economic activities that were reported for land transport, air transport, transport support services, and communications
- The personal services: Personal services increased by 0.6%, primarily due to improved economic activities in the education and health sector, contributing 0.1% to overall GDP growth
- The finance, real estate, and business services: The sector increased by 0,5% in the third quarter of 2023, contributing 0,1% to overall GDP growth. The growth was underpinned by increased economic activities in financial intermediation, real estate activities, and other business services
Figure 1: Namibia vs. South Africa GDP Growth rates (Q3 2019-Q3 2023)
Source: NSA, STATSSA & HEI RESEARCH
Figure 2: Namibia GDP by activity % change Quarter 3 2022 vs Quarter 3 2023
Source: NSA & HEI Research
Figure 3: South Africa GDP by activity % change Quarter 3 2022 vs Quarter 3 2023
Source: STATS SA & HEI Research
Outlook
Namibia
Namibia’s economy has shown strong growth, especially in mining and agriculture, despite challenges in construction and financial services. The mining sector, fueled by diamond and oil and gas exploration, has been a major contributor. Agriculture has proven resilient, benefiting from increased livestock marketing. The construction sector faced setbacks, mainly due to reduced government spending on transportation infrastructure. However, positive developments like green hydrogen projects and infrastructure loans suggest a potential improvement in 2024. Risks remain, including uncertainties in the investment environment, slow progress in power generation, growing debt, global developments, high living costs, expensive imports, water supply interruptions affecting mining, and the persistent threat of drought. Despite these challenges, the outlook for 2024 seems promising due to strategic initiatives, financial commitments, and positive performance in key sectors, contributing to Namibia’s overall economic resilience and growth potential.
South Africa
South Africa’s economy is facing mounting economic and social challenges. While South Africa’s electricity load-shedding has declined, domestic growth in the near term is likely to remain muted.
The longer-term economic outlook is, however, clouded by persistent risks to the inflation trajectory, the negative effects of climate change, outbreak of avian flu, unprecedented energy, and logistical constraints. Although domestic economic activity weakened the trajectory of GDP growth (and potential growth) going forward will be determined largely by the pace at which structural reforms in the energy and logistics sectors materialize. The SA Reserve Bank has forecasted South Africa’s GDP to grow to 1.2% and 1.3% in 2024 and 2025, respectively, due to an expected decrease in load-shedding.