November 01, 2024
Economy

Namibian economy to grow by 3.7% in 2023: IMF

April 29, 2022
Namibian economy to grow by 3.7% in 2023: IMF

The International Monetary Fund (IMF) says Namibia's economy is expected to grow by 3.7% in 2023 compared to 2.8% in 2022 and a negative growth of 0.9% in 2021.

In its economic outlook for Africa released this week, IMF noted that neighbouring Angola's economy will grow by 3.3% in 2023, compared to 3% in 2022 and 0.9% in 2021.

Botswana is expected to perform better than its peers in the region, with a projected growth of 4.2% in 2023, compared to 4.3% in 2022 but lower than the impressive 12.5% growth, the diamond producer recorded in 2021.

Namibia’s biggest trading partner, South Africa is expected to grow by 1.4% in 2021, lower than the growth of 1.9% in 2022 and 4.9% in 2021.

The Zimbabwean economy is expected to grow by 3% in 2023, from 3.5% in 2022 and 6.3% in 2021.

On Angola, a major trading partner of Namibia, the IMF noted that Angola grew 0.7% in 2021, reversing a five-year long recession streak.

“The country could not take full advantage of high oil prices because of recurring technical problems and low investment affecting oil production.”

Growth is expected to accelerate to 3% in 2022, with non-oil sectors (agriculture, construction, and transportation) as the main drivers of growth.

“In the medium-term, growth could gradually reach 4% because of high oil prices and the strong performance of non-oil sectors. Key risks to this outlook include high inflation (especially food) and continued oil production problems,” the fund said.

The IMF noted that the economic recovery in sub-Saharan Africa surprised on the upside in the second half of 2021, prompting a significant upward revision in last year’s estimated growth, from 3.7 to 4.5 percent. This year, however, that progress has been jeopardized by the Russian invasion of Ukraine which has triggered a global economic shock that is hitting the region at a time when countries’ policy space to respond to it is minimal to non-existent. Most notably, surging oil and food prices are straining the external and fiscal balances of commodity-importing countries and have increased food security concerns in the region, the IMF said.

“Moreover, the shock compounds some of the region’s most pressing policy challenges, including the COVID-19 pandemic’s social and economic legacy, climate change, heightened security risks in the Sahel, and the ongoing tightening of monetary policy in the United States.”

Papa N'Diaye, head of the regional studies division at the IMF, said the fund expects growth in Sub-Saharan Africa in 2022 to be 3.8%, and recovery, accelerate a little bit to 4% in 2023 and beyond. 

But he said the war in Ukraine has put a halt on the economic growth momentum.

“It led to a significant increase in commodity prices, more volatility in global financial markets. And it comes at a time when the policy makers in the region have little room for maneuver.

“So as a result, these types of growth that we are expecting are not enough to make up for the lost ground of the pandemic.

The IMF covers about 45 countries, and eight of these countries are oil exporters, several countries export precious metals, for which the prices have increased markedly. He said these countries will tend to benefit from the increase in oil prices and metals.

“But for most of the countries in the region, the remaining 37 countries in the region, the increase in oil prices, energy prices and food prices will put them in a very difficult position, because it's a negative term of trade. In fact, it will also worsen their external balance and their fiscal position.

N'Diaye said countries that will benefit from higher energy and metal prices may find themselves into difficulty because of the higher food prices.

“And it will be very difficult for those countries to reach the most vulnerable, especially in the big urban cities."

A worry for Namibia should be the projection that tourism-dependent countries experienced a short-term setback in their recovery with the emergence of the Omicron variant. Another issue that rings bells in Namibia is that the pandemic has left deep social scars including unemployment.

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Last modified on Monday, 02 May 2022 00:40
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