In 2023, the main drivers of GDP growth were the electricity and water sector, experiencing a notable expansion of 27.9%, a significant increase from 11.9% in 2022, a recent report by Simonis Storms reveals.
Additionally, the mining and quarrying sector contributed 18.9%, albeit showing a slowdown from the 24.0% recorded in 2022. The wholesale and retail trade sector also contributed positively with a 5.8% growth rate in 2023, along with the education sector at 3.5%.
“However, the construction sector emerged as the primary detractor from growth this year, the rate of decline improved to -0.2% in 2023 from -18.4% in 2022. Conversely, the agriculture sector experienced a negative growth rate of 11.3%, while manufacturing recorded -3.2%, and the public administration and defence sector -0.68%, weighing down heavily on overall economic growth,” the research firm added.
The Namibian economy continued to demonstrate growth during the fourth quarter of 2023, with a real GDP expansion of 4.4%, exceeding the growth rate observed in 4Q2022 (3.3%). This positive growth expansion suggests that underlying economic momentum remained solid. On an annual basis, 2023 closed with a real GDP growth rate of 4.2%. While this represents a moderation from the exceptional 5.3% growth recorded in 2022, it surpasses our earlier projection of 3.8% growth for the year.
Private consumption expenditure remains a crucial component of our economy, constituting 73.3% of GDP in 2023 compared to 75.4% in 2022. While growth continued on a positive trajectory, it slowed to 4.7% in 2023 from 9.5% in 2022. This deceleration can be attributed to constraints on consumers’ disposable income due to a high inflationary and interest rate environment.
Government expenditure, which accounted for 21.8% of GDP in 2023, experienced growth of 1.0% compared to 0.6% in 2022. Conversely, gross fixed capital formation saw significant growth in 2023, increasing to 69.3% from 10.0% in 2022. This growth can be attributed to increased expenditure in oil and gas exploration activities. Additionally, despite these positive developments, we continue to operate with a trade deficit.
The growth rates for both 2021 and 2022 have been adjusted upwards. These revisions were widespread across 16 sectors of the economy, except for the ICT, professional, scientific, and technical services industries, as well as the administrative and support services sector. The reason for these exceptions is attributed to updates in data.
The deceleration in overall growth primarily originates from the primary and secondary industries, whereas the tertiary industry continues to show steady growth. Preliminary National Accounts data shows that the primary industries drove growth, albeit at a slower rate, with a 9.7% increase compared to 13.7% in 2022, now falling below 2018 levels.
“This slowdown in primary industries is mainly due to reduced demand for diamonds, leading to lower production levels. The growth rate of secondary industries also declined to 2.0% in 2023 from 3.4% in 2022, primarily due to a contraction observed in the manufacturing sector. Meanwhile, tertiary industries saw an improvement in growth, reaching 2.7% in 2023 compared to 2.2% in 2022, marking the highest growth rate since 2015. This growth was observed across most sectors,” said Simonis Storm.