Panorama econòmic

Economic indicators

After years of robust growth, the Namibian economy entered into recession in 2019 and 2020, impacted by the dissipation of temporary stimuli, a drop in raw material prices, a severe drought, and then the COVID-19 pandemic. The economy returned to growth in 2021 (3.5%) and 2022 (4.6%), supported by robust diamond, gold, and uranium production, and a gradual recovery in tourism and manufacturing. Economic activity surpassed the pre-pandemic level in 2023, when growth was estimated at 3.2%, driven by mining and recovering tourism. The IMF projects growth to remain in the 2.5–3% range over the medium term, excluding offshore oil and gas exploration activities.

Namibia has experienced a period of exceptional growth masking increasing macroeconomic imbalances, a slowdown in productivity, and a decline in external competitiveness. Nevertheless, fiscal imbalances are expected to narrow, supported by fiscal consolidation measures to mobilize additional tax revenues and increase spending efficiency. The fiscal deficit decreased from 8.6% of GDP in FY21/22 to 5.3% of GDP in FY22/23. Revenue increased by 1.2% of GDP due to one-off dividends from state-owned enterprises, primarily diamond companies, offsetting the decline in SACU receipts (1.1% of GDP); increased mineral royalties; and improved VAT compliance measures. Expenditures decreased by 2.2% of GDP. In FY23/24, the fiscal deficit was estimated at 3.9% of GDP, leading to a decrease in the public debt-to-GDP ratio to approximately 66%. However, SACU revenues, which played a crucial role in achieving this favorable result, were anticipated to decline the following year, posing a challenge to the authorities' medium-term fiscal consolidation plan. Headline inflation dropped from a peak of 7.3% (y/y) in August 2022 to an estimated average of 6% in 2023; however, core inflation remained below 5%, and inflation expectations have returned to the target range of 3–6% (IMF). The IMF recommends tackling elevated public debt and slow growth in non-resource sectors, as well as implementing fiscal consolidation to ease debt burdens and stimulate private sector growth. Strengthening Public Financial Management (PFM) and improving the performance of State-Owned Enterprises (SOEs) will enhance productivity and ensure effective management of natural resource revenues. Streamlining business regulations and ensuring policy stability will invigorate the private sector.

Namibia is one of the countries with the highest inequalities: the country more than halved the poverty rate between 1993 and 2022, but poverty incidence remains relatively high for an upper-middle-income country (at around 18% as of 2022 using the international poverty line, according to the World Bank). Nevertheless, when using the upper middle-income poverty rate (USD 6.85), the poverty rate spikes to 57.3%. Unemployment is high and affected 20% of the population in 2022 (from 21.1% one year earlier - World Bank, latest data available), with a notable disparity between rural and urban areas, as well as among women and young people. Overall, the country’s GDP per capita (PPP) was estimated at USD 11,531 in 2022 by the World Bank.

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