Economy grows at slowest pace since recession
Brian Benza | Friday April 10, 2015 18:00
According to the Gross Domestic Product (GDP) statistics, the 4.4 percent growth is less than half the revised growth rate of 9.3 percent registered in 2013. The country’s economic back bone, mining, slowed down sharply to register a growth rate of just 4.5 percent in 2014 from 23 percent the previous year. The water and electricity sector was the biggest drawback to the economy as the sector registered a negative growth of 18 percent in the year.
Since the economic recession of 2009, when growth stood at a negative 7.6 percent, the economy has grown by healthy percentages of 8.6 percent in 2010, 6 percent in 2011, and 4.8 percent in 2012
“The slow growth rate of the mining sector is attributed to 6.6 percent increase in diamond production compared to a high increase of 12.2 percent in the previous year.
“The increase in real GDP was mainly due to transport & communications, trade, hotels & restaurants and mining which recorded an increase in value added of 7.4, 7.1 and 4.5 percent respectively,” the bank stated. The 4.4 percent annual growth recorded in 2014 is also below government and IMF projections. While the IMF and other pundits had an economic growth rate of just fewer than five percent, Ministry of Finance officials had projected the domestic economy to grow moderately by 5.2 percent in 2014.
Economist Keith Jefferis said that growth in 2014 was lower in 2014 across all economic sectors except for transport and communications, which could be a reflection of reduced economic confidence; immigration and work permit problems, and slower growth in government spending. In 2015, Jefferis predicts a growth rate of around four percent.
Chief investments officer at Afena Capital, Alphonse Ndzinge said that the 2014 growth was affected by a number of factors such as the slowdown in the growth rate of mining activity due to higher base effects of last year and the negative contribution from the water and electricity sector. “Household consumption growth was also relatively weak with low real wage growth and high unemployment,” he said.
Looking ahead, Ndzinge foresees at growth rate of between 4.5-5% in 2015 with the same trends of 2014 expected to continue. “Transport and communications, trade, hotels & restaurants and mining will continue driving growth. We also expect consumption to marginally improve with lower fuel prices, positive salary adjustments, and lower interest rates. Drought, power supply interruptions and weak demand in key export markets pose the greatest downside risk,” he added.