Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

After years of robust growth, 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. From a contraction of -8% GDP in 2020, the economy started to recover in 2021, growing by 1.3% (IMF). Economic growth is expected to strengthen to 3.6% in 2022 and 3.1% in 2023 (IMF), supported by mineral exports and private consumption (Coface).

Namibia has experienced a period of exceptional growth masking increasing macroeconomic imbalances, a slowdown in productivity and a decline in external competitiveness. While the economy was rebalancing, it was hit by a severe drought and the consequences of the pandemic-induced lockdown. Budget deficit worsened to -9.5% GDP in 2020, and while it narrowed to -8.4% GDP in 2021 and is expected to further decrease to -7.6%  GDP in 2023, it remains very high (Coface). Similarly, public debt increased to an estimated 69.9% GDP in 2021, and is forecast to further widen to 72.6% GDP in 2023 before starting to decline to 71.7% GDP in 2023 (IMF). To reduce the risk associated with indebtedness, the authorities are attempting to diversify their sources of financing (Coface). The exchange risk remains limited because this debt is mainly domestic, issued on long-term maturities and denominated in local currency. Inflation increased from 2.2% in 2020 to 4% in 2021, and is expected to reach 4.5% in 2022 and 2023, driven by food and transport prices (IMF). With the Namibian dollar pegged to the rand, the level of inflation will remain vulnerable to the volatility of the South African currency. The government 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. The government's priority is also to better redistribute wealth while maintaining a favorable business environment. Growth has not accompanied job creation and the extreme social and economic inequalities inherited from apartheid persist despite the generous spending allocated to social programs.

Namibia is one of the countries with the highest inequalities. In part due to impact of the pandemic, poverty rate is projected to stay near 65% through 2022 (World Bank) and around 15% of the adult population is infected with the AIDS virus. Unemployment is high and affected 20.4% of the population in 2020 (World Bank), with a notable disparity between rural (39%) and urban areas (30%), among women (38%) and young people (43%).

Any Comment About This Content? Report It to Us.