The Bank of Namibia (BoN) says the economy is projected to grow by 3.5% in 2024, a decrease from last year’s growth rate of 4.2%.
The BoN’s December 2024 Economic Outlook Update attributes the revised forecast, from the 3.1% predicted in August, to improved domestic conditions, despite global economic headwinds and ongoing drought.
“This revision is primarily driven by stronger-than-expected performances in the gold mining and livestock marketing activities within the primary industry and better performance for sectors such as health, information and communication and wholesale and retail trade within the tertiary industry,” the Central Bank said.
The BoN added that the slower growth, when compared to 2023, is attributed to a weak performance in the primary industry, mainly on account of anticipated contractions in diamond production and crop farming.
“The diamond mining sector is expected to register a contraction during 2024 and relatively low growth rates during the remainder of the forecast period, mainly due to weakened global demand and shifting of demand from natural diamonds to lab-grown diamonds,” said the BoN.
However, growth is projected to rebound to 4.0% in 2025, supported by improving global conditions and domestic policy measures to boost economic growth.
“Such policy measures include the reduction in personal income tax brackets and the easing of monetary policy. The upward revision of 2025 GDP growth is based on improved prospects in the construction sector, largely in the form of an increased development budget by the Government,” said the report.
Furthermore, the 2025 growth projection for crop farming was increased as the sector is expected to converge towards the long-term trend following two years of substantial contractions.
This comes as the agriculture, forestry and fishing sectors are expected to contract in 2024 before improving in 2025.
Following the contraction of 3.4% in 2023, the sector is forecast to decline by 3.3% in 2024 before rebounding to a growth of 2.6% in 2025.
“This poor growth trend is primarily attributed to crop failures due to severe drought experienced across all production sub-categories during the 2024/2025 planting season. Looking ahead to 2025, crop production activities are projected to recover on the back of anticipated La Niña induced rainfall, which is expected to support the sector’s recovery,” said the BoN.
According to the Columbia Climate School, the probability of La Niña occurrences is foreseen at over 60% by the end of 2024 and the beginning of 2025.
The Central Bank highlighted that the remainder of 2025 is anticipated to be characterised by normal weather conditions with prospects for regular rainfall.
Similarly, the Southern Africa Regional Climate Outlook Forum (SARCOF-29) anticipates Namibia to experience normal to above-normal rainfall for the period November 2024 to March 2025.
Meanwhile, the GDP forecast revision comes as the livestock subsector is expected to record a robust growth of 11.5% in 2024, up from 9.1% in 2023, driven by increased livestock marketing as farmers dispose of stock due to severe drought pressures.
However, growth is projected to decline in 2025 as farmers are expected to rebuild their herds.
