NAMIBIA is likely to reach only about 37 per cent of its entire 2008 diamond production this year as the global market continues to lose its shine.
Production spiked to above two million carats last year, but is expected to shrivel to just under 800 000 carats this year.
In its mid-year economic outlook, the Bank of Namibia (BoN) said it has revised its diamond production forecast downwards for the second time this year.
The BoN's hopes in February that 2009 production will only shrink by 48 per cent, dimmed by April when the central bank forecast that production is likely to tumble by 60 per cent.
Now it expects output to plunge by nearly 63 per cent.
Chances that the sector regains its former glory as the gem of the Namibian economy in the near future, are slim.
"It is not foreseen that a noticeable change in demand will be observed before the end of 2010," the BoN said.
More than 1 900 people have lost their jobs because slumping world demand forced Namdeb to scale back its operations, the bank said.
No land operations in January, July, August and September, as well as suspended sea operations in January, April, May and June also mean that Government's tax revenue will dwindle.
In addition, sightholders of the Namibian Diamond Trading Corporation (NDTC) have stopped adding value to their diamonds, causing even more job losses. On top of this, contractors for the diamond sector have also lost work, the BoN said.
Uranium is the economy's new knight in shining armour.
Positive developments in the international nuclear energy sector and subsequent boost in the local uranium sector are expected to fuel growth in Namibia non-diamond mining sector.
The BoN predicts growth of two per cent, a significant turn-around from the 8,1 per cent decline last year.
The outlook for the rest of Namibia's commodities is expected to remain uncertain.
"The demand for copper and zinc depend primarily on the performance of the global market, as the two commodities are input materials in many industrial processes," the BoN said.
The zinc price last year was 48 per cent of the 2007 average.
"Towards the end of 2010, the price for zinc is expected to pick up in line with an anticipated global recovery," the BoN said.
Because of the massive contraction in diamond output, growth in the primary industries sector as a whole is likely to plummet to minus 27 per cent this year, according to the bank's latest forecast.
Next year should see a recovery to 4,9 per cent, the BoN expects at this stage
