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World Bank forecast Namibia’s growth at 2.8%, public debt at 78.9% of GDP

By October 05, 2022 2956
World Bank forecast Namibia’s growth at 2.8%, public debt at 78.9% of GDP

The World Bank has slashed Namibia’s economic growth for this year and painted a gloomy picture about the country’s public debt. 

In its Africa Pulse Report for October 2022, the World Bank said Namibia’s economy is now expected to grow by 2.8%, down from 2.9% predicted in April this year, while the country’s public debt is projected to nudge up to 78.9% of GDP in 2022. 

“The Namibian economy struggled to pick up speed, up from 2.7% (2021) to 2.8% (2022). The growth is on account of good performance of the mining sector, particularly, rising output of diamonds, copper, and uranium. However, contractionary monetary policy to maintain parity with the South African rand and to fight rising inflation may drag down growth. The twin deficits recorded last year will persist in 2022,” World Bank’s noted. 

This comes as the government’s total debt as a percentage of GDP stood at 68.2%, increasing by 0.4 percentage point at the end of June 2022 according to the Bank of Namibia data released last week. 

Mineral and metal resource-rich countries, a grouping in which Namibia is classified under, are forecast to grow by 4.5%, down from 5.1% in 2021 according to the World Bank. 

“The growth projected in April is revised down by 0.2 percentage point as the external receipts from high metal prices proved insufficient to make up for rising import bills.” 

Growth of the regional economy is expected to slow to 3.3%, from 4.1% in 2021, a downward revision of 0.3 percentage point from the April 2022 Africa’s Pulse forecast. 

“Economic growth continues to be supported by high commodity prices, global trade, and domestic demand. Note that the downward revision from the April Africa’s Pulse forecast is on the back of multiple shocks affecting the economy, which include the conflict in Ukraine, rising food and fuel prices, elevated public debt, and the slowing down of the global economy.” 

Economic growth for the region excluding Angola, Nigeria, and South Africa is projected to slow to 3.8% in 2022, from 4.4% in 2021, but higher than the regional growth of 3.3% according to the report. 

“The growth rate is revised down from the forecast of 4.1% in the April 2022 Africa’s Pulse, mostly owing to the impact of commodity prices, which varies across countries.” 

The Angolan economy is one of the major beneficiaries of favourable terms of trade, which translates into real growth of 3.1% in 2022, from 0.8% in the previous year.

“The 0.2 percentage-point upgrade in growth relative to the April projections reflects the contribution of a higher-than-expected rally in oil prices, averaging about US$100 per barrel in 2022.” 

Africa Pulse Report is produced by the Office of the Chief Economist for the Africa Region of the World Bank. 

Meanwhile the International Monetary Fund Staff Completed a 2022 Article IV Mission to Namibia and forecasted a real GDP growth of 3% in 2022 and 3.2% in 2023.

 

“The current account deficit would remain large, financed by FDI inflows in oil and gas and one-off transactions. The fiscal deficit is expected to narrow, supported by strengthened tax revenues and fiscal consolidation measures. Preserving macroeconomic stability, advancing structural reforms and protecting the most vulnerable is key to fostering private sector-led and inclusive growth and reducing unemployment and inequality,” IMF mission chief for Namibia Giorgia Albertin said.

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Last modified on Wednesday, 05 October 2022 17:45
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