The International Monetary Fund (IMF) has cut its 2023 growth forecasts for Namibia to 2.8% from an earlier projection of 3.2%, amid revelations of a global slowdown in economic growth.
The IMF said Namibia’s growth will average 2.6% in 2024. The Bretton Woods institution said the country’s annual inflation will average 5% this year before slowing to 4.6% in 2024.
“We are therefore entering a perilous phase during which economic growth remains low by historical standards and financial risks have risen, yet inflation has not yet decisively turned the corner,” the IMF said in its latest World Economic Outlook.
“More than ever, policymakers will need a steady hand and clear communication. The appropriate course of action is contingent on the state of the financial system. As long as the latter remains reasonably stable, as it is now, monetary policy should stay firmly focused on bringing inflation down.”
The IMF’s projections come as the Bank of Namibia warned that risks to domestic growth are predominantly in the form of monetary policy tightening globally, as major central banks around the world continue to tighten monetary policies. This could lead to a global slowdown in 2023, which could impact Namibia’s economic growth.
The high costs of key import items such as fuel, wheat, and cooking oil are also expected to remain for the entire forecast period, which could affect the country’s economy, as Namibia is a net importer of these commodities.
Domestic risks include water supply interruptions that continue to affect mining production at the coast and energy challenges in the region. There is also uncertainty about the effects of climate change going forward, which could further impact Namibia’s economic growth.
