Namibia’s Gross Domestic Product (GDP) growth is poised to decelerate, primarily attributed to adverse weather conditions and a downturn in consumption, according to predictions by FNB Namibia Economist Ruusa Nandago.
Nandago forecasts a substantial impact on various sectors, anticipating a GDP growth of 3.3% in 2023 and a further decline to 2.8% in 2024, down from the robust 4.6% recorded in 2022.
This comes as the agriculture sector in the second quarter of the year experienced a severe contraction of 31.9% year-on-year—the most significant downturn since the 2019 drought.
“This contraction contributed to an overall slowdown in GDP growth, sliding from 5.3% in 1Q23 to 3.7% in 2Q23.The Namibian government’s official declaration of a drought in June triggered a series of consequences for the economy. The drought relief program, effective from October 2023 to June 2024, aims to alleviate the strain on the agricultural sector,” said Nandago.
“Given that private consumption constitutes approximately 78% of Namibia’s GDP, a 4.2% year-on-year contraction in private consumption during 2Q23 is noteworthy. This downturn is expected to ripple through sectors such as wholesale and retail trade, residential property, and clothing and footwear, impacting import growth due to Namibia’s high import dependency.”
Nandago said “with disposable incomes facing pressure from high interest rates, increased debt servicing costs, and elevated prices for utilities and fuel, a prolonged consumer slowdown is expected to persist into 2024”.
Despite the challenging economic climate, Nandago highlights a positive outlook for the mining sector, buoyed by an upswing in uranium prices.
“The reopening of the Langer Heinrich Uranium mine in 2024 and the extended operations of the Rössing Uranium Mine are expected to drive mining activity. Furthermore, increased exploration and interest in various minerals, including rare earth elements, base metals, and nuclear fuels, bode well for the mining sector’s growth,” she said.
However, Nandago cautions that mining, a key growth driver, may face challenges from global economic slowdowns and softened commodity prices.
“These factors could potentially temper export growth, considering Namibia’s heavy reliance on mineral exports.”
