WINDHOEK - Plummeting uranium spot prices worldwide have severely hit Namibia’s uranium sector which contributes significantly to the Southern African country’s Gross Domestic Product.
Ironically, the Namibian uranium industry has been experiencing an influx of Chinese investors albeit at a time when all consumers of the product, mostly superpowers, are opting for cleaner energy at the expense of nuclear, leaving the sector exposed to market gluts.
According to the latest economic report released by the Bank of Namibia, the poor performing uranium sector has also had negative effects on the overall Namibian economy, which is now expected to shrink by a considerable 1.7 percent before an upturn next year.
The Namibia central bank said the sector has remained subdued for a consistent period as anti-nuclear energy persist with most traditional buyers of the product opting for cleaner energy, including renewables.
The Bank of Namibia also revealed that the effects of the ongoing drought in Namibia and the SADC region have also been equally devastating on the already struggling economy which has been in a depression for the past two years.
The figures released by the Namibian central bank shows that the effects of drought and receding uranium prices will see the economy shrink by 1.7 percent at the back of an ongoing depression.
The Namibian central bank said the economy was expected to fall into a deeper contraction during 2019, before returning to positive growth in 2020.
“The projected contraction of 1.7 percent for 2019 represents a further deterioration from a mild contraction of 0.1 percent in 2018, according to NSA’s preliminary estimates. The expected deeper contraction during 2019 will be in line with the devastating drought being experienced currently and the anticipated contractions in major sectors such as diamond mining and wholesale and retail trade,” the bank said.
The Namibia central bank also said risks to the domestic economic outlook remained and include the persistently low uranium price and unpredictable rainfall, adding that the low uranium price continued to adversely impact the prospects for uranium production in the country, while the erratic rainfall may continue to negatively affect the performance of the agriculture sector beyond 2019.
“The latest growth projection for 2019 is a downward revision when compared to the April 2019 Update, largely due to the projected weaker performance in agriculture and wholesale and retail sectors. The latest overall growth projection of -1.7 percent for 2019 represents a downward revision from 0.3 percent published during April 2019,” said the Namibia central bank.