Namibia: Economic and Political Overview
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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 (2.7%) and 2022 (3%) supported by robust diamond, gold, and uranium production and a gradual recovery in tourism and manufacturing. The gradual economic recovery is expected to continue in 2023, with the IMF projecting growth at 3.2%.
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. Fitch Ratings forecasts the FY22/23 fiscal deficit to be 7.1% of GDP, down from 8.5% in the preceding fiscal year, while the FY 2023/24 budget foresees a primary surplus. The country’s debt-to-GDP ratio stood at an estimated 71.8% in 2022 and is expected to remain stable over the forecast horizon. To reduce the risk associated with indebtedness, the authorities are attempting to diversify their sources of financing (Coface). The exchange risk remains limited because the debt is mainly domestic, issued on long-term maturities and denominated in local currency. Meanwhile, a weakened exchange rate and high oil prices have led to continued increases in transport, housing and food prices, with inflation reaching 6.4% in 2022. The Bank of Namibia increased its policy rate by 50bp to 6.75% in November in an effort to contrast inflation, which is forecasted to gradually ease to 4.9% this year and 4.5% in 2024. The government's priorities are to support recovery and economic growth, to ensure the sustainability of public finances and debt through fiscal consolidation, to reform the tax system and to implement structural policy reforms, while also redistributing wealth and maintaining a favourable business environment.
Namibia is one of the countries with the highest inequalities: the country more than halved the poverty rate between 1993 and 2016, but poverty incidence remains relatively high for an upper-middle-income country. According to the World Bank, the incidence of poverty stood around 64% as of 2021 and around 15% of the adult population is infected with the AIDS virus. Unemployment is high and affected 21.3% of the population in 2021 (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 10,791 in 2022 by the IMF.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
| GDP (billions USD) | 10.58 | 12.31 | 12.35 | 13.49 | 14.29 |
| GDP (Constant Prices, Annual % Change) | -8.0 | 2.7 | 3.8 | 2.8 | 2.6 |
| GDP per Capita (USD) | 4,225 | 4,826 | 4,754 | 5,100 | 5,306 |
| General Government Gross Debt (in % of GDP) | 66.6 | 72.0 | 71.3 | 68.5 | 66.8 |
| Inflation Rate (%) | 2.2 | 3.6 | 6.1 | 5.0 | 4.6 |
| Current Account (billions USD) | 0.27 | -1.21 | -1.66 | -0.71 | -0.52 |
| Current Account (in % of GDP) | 2.6 | -9.8 | -13.5 | -5.3 | -3.7 |
Source: IMF – World Economic Outlook Database, October 2021
Namibia is one of the most important diamond exporters and the 3rd-largest uranium producer in the world. The country also has one of the most productive fishing industries. Agriculture accounts for 9.5% of the Namibian economy and employs 22% of the workforce (World Bank, latest data available), although around 70 % of the population depends directly or indirectly on agriculture for their income and livelihood. The country's arid climate and geographic conditions do not favour farming and the crop variety is rather limited: Namibia is the driest country in Sub-Saharan Africa and depends largely on groundwater (only 2 % of Namibia’s land receives sufficient rainfall to grow crops). Major crops include maize, millet and sorghum. The livestock sector is productive and export-oriented, with beef accounting for the largest share of livestock exports. Fishing is another important component of the primary sector (accounting for almost 25% of all activities), as Namibian waters are rich in fish. According to the latest data from FAO, total cereal production was forecast at 152,000 tonnes in 2022, an above‑average level thanks to favourable weather conditions. Production of wheat was forecast to triple on a yearly basis in 2022, as high prices spurred an expansion in plantings.
The secondary sector contributes 25.3% of the GDP and employs about 16% of the active population. The sector is characterised by the predominance of the mining industry thanks to the country's rich subsoil. Major mining products include diamonds, uranium, lead, copper and arsenic. Diamonds account for almost 70% of all mining exports. While Namibian diamond production is less significant than neighbouring countries (Botswana, South Africa and Zimbabwe), the country is among the world's first in value per unit. Namibia also has the largest marine mine in the world. Offshore diamond production is increasing (it provides 75% of total production according to Coface), while onshore extraction is decreasing due to the exhaustion of terrestrial deposits. In addition, Namibia is the third-largest producer of uranium in the world and is home to two mines capable of producing 10% of the world's output. Husab's uranium mine is the third-largest surface uranium mine in the world. Food processing (beef and fish) is the largest non-mining component of the secondary sector. According to the World Bank, manufacturing accounts for around 11% of GDP.
Services account for 58.3% of GDP and employ 62% of the working population. The main sub-sectors within services include tourism, financial services, retail and wholesale trade, transport and communication, and public administration. Namibia's diverse landscapes and extensive wildlife offer significant tourism assets and as such, tourism is a major source of income, its direct contribution to GDP being around 10%. The construction sector is the activity that suffered the most during the recession and is struggling to regain positive momentum. The banking sector in Namibia comprises nine authorised banking institutions, including seven commercial banking institutions, a branch of a foreign bank, and a representative office (Bank of Namibia).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 21.9 | 16.4 | 61.8 |
| Value Added (in % of GDP) | 9.5 | 25.3 | 58.3 |
| Value Added (Annual % Change) | 2.0 | 1.4 | 1.9 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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Latest Update: May 2023
