Strong economic growth expected in Q1 2022
According PSG Wealth, ahead of the official statistics that are yet to be released, the expected growth partially reflects base effects due to disappointing economic activity in the first quarter of 2021.
PSG noted that mining output bounced back strongly at the start of 2022 following a disappointing start to last year due to maintenance issues at several mining operations. The average mining production index rose by 24.5% year-on-year in Q1 2022 compared with a contraction of 24.6% year-on-year in Q1 2021.
Diamond, gold, and zinc mining production have risen strongly on an annual basis from a low base set last year, while uranium output decreased year-on-year in Q1 2022 due to water supply issues, PSG pointed out.
In addition, the average livestock marketed index increased by 26.2% year-on-year in Q1 2022, following a large decline in the index of 26.3% in the first quarter of 2021. Livestock marketing and exports have improved lately, following successive years of devastating drought that depleted livestock populations, thanks in part to better rainfall and higher meat prices.
Moreover, regarding tourism, the average bed occupancy index for the first quarter of 2022 grew by 12.3% year-on-year. Despite some relaxation in global travel restrictions lately, occupancy in the travel and tourism industry is about two-thirds of pre-pandemic levels. The average beverage composite index broadened by 15.2% year-on-year in Q1, thanks mainly to the relaxation of pandemic-related alcoholic sales restrictions in Namibia and South Africa over the past year — the rainbow nation is the main destination of Namibian beer exports, PSG said.
Meanwhile, the average electricity sales composite index surged higher by 16.8% year-on-year in quarter one of 2022. Locally generated electricity has been boosted by good rains in Angola, resulting in higher river flow at the Ruacana hydroelectric power plant as well as an increase in generation from independent solar-power producers.
“We forecast economic growth will accelerate to 3.5% in 2022 from 2.4% in 2021 on the back of increased mining output and improved tourist arrivals.”
Risks to the economy include rising interest rates, higher inflation, owing to supply constraints caused by the Russia-Ukraine war and the ongoing global pandemic, PSG said.