The Bank of Namibia (BoN) forecasts the domestic economy to grow 3.9% in 2022 before moderating slightly to 2.7% in 2023, the central bank announced on Tuesday, largely driven by the recovery in the country’s mining sector.
The BoN estimates are, however, higher than 2.8% forecasted by Finance and Public Enterprises Minister Ipumbu Shiimi in his October Mid-Year Budget Review for 2022 and 3.4% for 2023.
“The estimated growth for 2022 represents a 0.7 percentage point upward revision from the August 2022 Economic Outlook release. The revision in the 2022 growth is mainly on account of strong growth for diamond mining, based on higher production volumes to date, as well as sustained growth for most industries in secondary and tertiary sectors. Most of the sectors in the secondary and tertiary industries are expected to register positive but low growth rates during 2022 and 2023,” BoN Spokesperson Kazembire Zemburuka said in the apex bank’s December economic outlook.
He said risks to domestic economic growth are predominantly in the form of monetary policy tightening around the world and high costs of key import items that are likely to persist in the near term.
“Major Central Banks around the world are tightening monetary policies at faster rates than initially anticipated, a trend that could lead to a global recession. Further, the ongoing war between Russia and Ukraine is likely to continue, and as a consequence price for affected commodities are likely to remain elevated. Other risks include water supply interruptions that continue to affect mining production at the coast and uncertainty around the effects of climate change on agricultural production going forward,” Zemburuka said.
GDP growth in the Sub-Saharan African (SSA) region is expected to slow from 4.7% in 2021 to 3.6% in 2022 before improving to 3.7% in 2023 according to BoN.
“The latest growth projections were revised downwards from the July 2022 International Monetary Fund’s World Economic Outlook update, which reflects the negative impact of elevated food and fuel prices coupled with sluggish demand for export commodities for most of the countries in the region.
“Moreover, the weaker growth outlook in Sub-Saharan Africa is predominantly attributed to lower trading partner growth, deterioration in terms of trade, and tighter financial and monetary conditions,” he said.
PSG Namibia forecasts that real GDP growth will accelerate to about 3.5% in 2022 from 2.4% in 2021, thanks to new mining activities, increased investment in the energy sector, and reduced pandemic-related restrictions.
Namibia’s mining production targets for 2023 are, however, under threat from the continued rise in fuel prices, the Chamber of Mines of Namibia has warned.
