…as primary sectors are poised for a drop in growth.
Growth for diamond mining is projected to turn negative in 2024 on the back of reduced global demand and high base effects from 2023, the Bank of Namibia has said.
Following a strong performance in 2023, the central bank says that the diamond mining sector is poised for a contraction of 4.4 percent in 2024 before recovering to 5.7 percent growth in 2025.
“The estimated contraction in 2024 is largely attributed to the reduced demand for the precious stone due to subdued growth in the world economy, switching of demand in the luxury segment from jewellery to travelling, and increasing competition from lab-grown diamonds. These factors exerted a downward pressure on prices for natural diamonds, and producers are expected to cut supply during 2024 to induce a recovery in prices,” the bank said.
Notably, primary industries are expected to register a contraction in 2024 on the back of the drought and reduced demand for minerals before recovering in 2025. The industry is anticipated to experience a marked deceleration, with growth projected at -2.0 percent compared to the robust 9.7 percent recorded in 2023. However, a moderate recovery is expected in 2025, with growth forecast at 3.1 percent. This growth trajectory is shaped by poor performance within the agriculture and mining sectors. In the March 2023 Economic Outlook update, primary industries were anticipated to grow by 1.7 percent and 4.5 percent in 2024 and 2025.
Agriculture
The agriculture, forestry, and fishing sectors are expected to further contract in 2024 before improving slightly in 2025. The sector contracted by 3.4 percent in 2023, and this decline is expected to intensify to 4.9 percent in 2024 before moderating to a minor contraction of 0.1 percent in 2025. This downward trend is primarily attributed to the crop farming subsector, which is anticipated to experience a severe downturn from a decline of 31.7 percent in 2023 to a deeper contraction of 34.5 percent in 2024 due to persistent drought conditions. Conversely, the livestock subsector is expected to record a robust growth of 6.6 percent in 2024, down slightly from 9.1 percent in 2023. Growth in livestock farming is driven by increased livestock marketing necessitated by the drought. However, livestock growth is projected to decline in 2025 as herd rebuilding efforts commence.
Uranium
The uranium mining sector is anticipated to experience a slowdown in 2024, following robust growth in 2023. This projected slowdown is reflected in the anticipated growth rate of 3.6 percent for 2024 compared to 24.3 percent in 2023. The moderation is primarily attributed to stripping activities currently underway at certain mines, which are expected to impact production volumes in the near term. However, a resurgence in growth is expected in 2025, with a projected growth rate of 5.2 percent. These growth estimates for 2024 and 2025 have remained unchanged since March 2024.
Metal ores
The metal ores sub-sector is projected to contract in 2024 and 2025. The metal ores sector is expected to contract by 3.5 percent and 0.6 percent in 2024 and 2025, respectively, from a robust growth of 28.9 recorded in 2023. This decline is attributed to reduced production for both gold and zinc subsectors. Gold production is expected to reduce over time due to the depletion of resources, while the anticipated fall in zinc production is a result of depressed zinc prices.
Growth for other mining and quarrying (which include oil exploration) is expected to moderate but remain robust during 2024. The other mining and quarrying subsector is expected to grow by 9.2 percent and 4.6 percent in 2024 and 2025, respectively, a significant reduction from growth of 37.2 percent registered in 2023. The anticipated slowdown in 2024 is on account of base effects following intensive oil exploration and drilling in the previous years. These projections reflect upward revisions of 0.5 percentage points in 2024 and 0.3 percentage points in 2025, respectively, when compared to corresponding projections published in March 2024.