Manufacturing suffers almost 20% decline

By Hilary Mare

THE manufacturing sector bore the brunt of the impact of Covid-19 and associated lockdown measures during 2020 as several manufacturers were forced to stop or minimise operations, FirstRand Namibia economist, Ruusa Nandago has said.
In a commentary released this week, Nandago highlighted that this was further compounded by a decline in the demand for manufacturing products as incomes in the economy became constrained.
“As a result, output in this sector declined by 19.6 percent y/y compared to a growth of 4.3 percent y/y during 2019. This contraction makes manufacturing the third worst performing sector during 2020 after hotels and restaurants which contracted by 33.1 percent y/y and transport and storage which contracted by 22.4 percent y/y over the same period. Given that this sector contributes 11 percent to GDP, this had a material impact on overall economic performance,” she said.
Driving the significant decline in the manufacturing sector are the spillovers from the decline in the mining sector. Decline in diamond production because of lockdown and a slowdown in commodity prices had an impact on the diamond processing subsector of manufacturing which fell by 14.1 percent y/y.
“Similarly, metals processing declined by 46.8 percent y/y. The lingering effects of the 2019 drought also compounded this decline as meat processing declined by 40.8 percent y/y. This was mainly a result of farmers rebuilding their livestock herds and thus reducing the supply of meat to be slaughtered.
“Lastly, alcohol bans and reduced alcohol sales both in Namibia and South Africa resulted in reduced beverage production which declined by 36.5 percent y/y,” Nandago explained adding that looking ahead, output in this sector is expected to recover from the levels seen during 2020 in the absence of severe lockdown measures.
“Total output is, however, expected to remain below pre-pandemic levels owing to reduced demand in the economy, the closure of some smaller manufacturing companies and restrictions on alcohol sales because of curfews”.