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Diamonds, uranium projected to spearhead Namibia’s recovery

According to the Bank of Namibia (BoN), diamond output was down 14,7 per cent in real terms in 2020, and growth is projected at 2,8 per cent in 2021 and 16,9 per cent next year.

Namibia expects robust growth in diamond and uranium mining this year after the two sub-sectors experienced a slump in 2020 due to the global economic downturn caused by the COVID-19 pandemic.

Diamonds are largely a luxury good and consumers spent less on such items during the economic downturn as they focused on necessities.

The Namibia central bank said, “The 14,7 per cent contraction experienced in 2020 represented an improvement from a deeper contraction of 24,7 estimated during August 2020. The revision is based on the latest production estimates, where mining is expected to continue during 2020 despite challenges faced in making sales.”

The BoN said uranium mining was also down in 2020 but should experience solid recovery in 2021.

“The uranium mining sector, which contracted by 5,2 per cent in 2020, will expand by 8,5 per cent and 5,7 per cent in the following two years. The sector is grappling with existing factors that include an insufficient supply of water required for their operations and persistently low uranium prices, viewed together with the reduction in long-term supply contracts.

“This means that uranium mines are more exposed to spot prices, which squeezes their margins. The 5,2 per cent contraction estimated for 2020 is an improvement from a deeper contraction of 22,9 per cent estimated in August 2020. This revision was based on year-to-date production levels.”

The agriculture, forestry, and fishing sector – which contracted by 1,6 per cent in 2020 – is expected to rebound with growth rates of 3,1 per cent and 4,2 per cent in 2021 and 2022 respectively.

The contraction in 2020 was in line with depleted livestock numbers from preceding years, which reduced marketing activities.

“In this regard, livestock farming contracted by 6,4 per cent in 2020. A robust growth estimated for crop farming is expected to keep the overall contraction in agriculture, forestry, and fishing on the moderate side during 2020. The estimated contraction in agriculture, forestry, and the fishing sector was revised to 1,6 per cent, from a high contraction of 7,1 per cent published in the August 2020 Economic Outlook,” the BoN said.

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