The Bank of Namibia says the Namibian economy is expected to shrink by 0,5% in 2024, bringing it to 3,4% after a growth forecast of 3,9% in 2023.
This was according the central bank’s Economic Outlook update for December 2023, released last week.
The report further projected a slowdown in the global economic growth due to various factors.
“Namibia’s gross domestic product growth is projected to slow down in 2023 and 2024 due to weaker global demand and expected contraction in agriculture,” said Bank of Namibia spokesperson Kazembire Zemburuka.
This decline is attributed to tight monetary policies aimed at curbing inflation, financial instability, ongoing conflicts like the Ukraine war and increasing geopolitical tensions.
According to the report, global growth is expected to decline from 3,5% in 2022 to 3,0% in 2023 and 2,9% in 2024.
Emerging Market and Developing Economies are also anticipated to sustain stable growth but at a slightly reduced rate.
“While the global outlook remains challenging, we anticipate growth despite these hurdles,” said Zemburuka.
According to the report, the expected growth has been attributed mainly to the great performances in mining and quarrying activities.
Challenges for domestic growth persist with global monetary tightening and sustained high costs of crucial imports.
However, Zemburuka expressed caution about the risks linked to global monetary tightening and sustained high import costs, such as “ongoing global conflicts affecting Namibia’s commodity imports and internal issues like water supply disruptions hampering mining activities pose risks to the economy”.
The report pointed to a decrease in primary industries, especially diamond mining, due to declining international prices.
“The diamond mining sector is expected to grow by 5,5% in 2023, a significant slowdown from the 45,1% growth in 2022,” said Zemburuka.
Zemburuka, however, added that there are sectors showing signs of recovery and positive outlooks.
“Uranium mining is expected to expand significantly by 14,8% in 2023 before moderating to 3,0% growth in 2024,” said Zemburuka.
He further highlighted concerns about potential drought-induced food price spikes and supply chain disruptions from conflicts impacting global growth.
“The risks tied to persistent inflation may lead to increased demands for higher wages,” said Zemburuka.
These challenges might spur wage demands due to increased living costs, food price spikes from droughts, supply chain disruptions from conflicts and China’s property market crisis impacting global growth.
In sub-Saharan African economies, growth is predicted to decelerate from 4,0% in 2022 to 3,3% in 2023 before rebounding to 4,0% in 2024.
The slowdown is linked to weather shocks, global economic deceleration and persistent inflation.
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