The Namibian economy is projected to slow down in 2024 before improving marginally in 2025.
The domestic economy is estimated to decelerate from 4.2 percent in 2023 to 3.7 percent in 2024 before improving to 4.1 percent in 2025.
“The projected slowdown is largely on account of weaker global demand and slower growth in the primary industry. GDP growth is, however, expected to improve marginally in 2025, mainly on account of rebounding activities within the Agriculture and Mining sectors. The latest projections for 2024 and 2025, reflects an upward revision of 0.3 and 1.0 percentage points from similar projections published in the December 2023 Economic Outlook update,” Bank of Namibia says in a recent report.
Risks to domestic growth are predominantly in form water supply constraints, drought condition and high costs of key import items that are likely to persist for a long time. Domestic risks include water supply interruptions that could continue to affect mining production at the coast. Possible adverse weather shock which could cause spikes in food prices coupled with supply chain disruptions from global trade flows. The faltering growth in China could affect demand for Namibian commodities.
On the other hand, global economic growth is projected to remain low in 2024 before improving slightly in 2025. The projected sluggish global growth in 2024 and 2025 reflects elevated central bank policy rates to fight inflation, limited fiscal space, as well as growing geo-economic disintegration.
According to the IMF’s World Economic Outlook (WEO) update for January 2024, global growth is projected at 3.1 percent in 2024 before rising moderately to 3.2 percent in 2025. This forecast represents an upward revision of 0.2 percentage point for 2024, compared to the October 2023 WEO, while the growth for 2025 remained unchanged.
“Growth in Emerging Market and Developing Economies (EMDEs) is projected to remain stable in 2024 and 2025. Growth in EMDEs is expected to remain at 4.1 percent in 2024, before rising to 4.2 percent in 2025. The growth projection for 2024 reflects an upward revision of 0.1 percentage point from the previous forecast, mainly on account of stronger-than expected fiscal support within this group of economies.”
On the regional front, growth in Sub-Saharan African (SSA) economies is expected to accelerate in 2024 and 2025. GDP growth in the SSA region is projected to increase to 3.8 percent and 4.1 percent in 2024 and 2025 respectively. The performance is attributed to subsiding negative weather effects at the time of forecast, coupled with gradual improvement in the supply chain. The latest projection for 2024 represents a downward revision of 0.2 percentage point from October 2023 WEO, mainly on account of increasing logistical constraints in South Africa.