Namibia’s projected economic growth for 2024 is expected to be among the lowest in Africa, with the United Nations (UN) ranking it in ninth place.
According to the UN World Economic Situation Prospects Report 2024, the country’s gross domestic product (GDP) is expected to slow to 2.6% this year, from the 3.2% projected for 2023.
This is lower than the predictions made by the Namibian Treasury which announced that GDP is expected to slow down to 2.9% in 2024.
On the other hand, the International Monetary Fund (IMF) predicts a 2.8% growth, also a decline from the 3.2% predicted while the World Bank predicts a 2.9% growth in 2024, an increase from the 2.8% predicted in 2023.
According to First National Bank Namibia (FNB), the slowdown can be attributed to a drought leading to a severe contraction in the agriculture sector, the most significant downturn since the 2019 drought, triggering a series of consequences for the economy.
The contraction of the agriculture sector in the second quarter of 2023 played a role in an overall deceleration of GDP growth, decreasing from 5.3% in 1Q23 to 3.7% in 2Q23. The slowdown prompted the institution of the drought relief programme from October 2023 to June 2024 to ease the pressure on the agricultural sector.
The Bank 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.
FNB reported that disposable incomes are facing pressure from high interest rates, increased debt servicing costs, and elevated prices for utilities and fuel, further driving a prolonged consumer slowdown into 2024.
The Bank noted that private consumption makes up around 78% of Namibia’s GDP, the noteworthy aspect is a 4.2% year-on-year contraction in private consumption during 2Q23.
The decline is anticipated to have a cascading effect on various sectors like wholesale and retail trade, residential property, and clothing and footwear, thereby affecting import growth given Namibia’s high import dependency, the bank mentioned.
On the other hand, PSG Wealth Namibia forecasted a 3.8% GDP growth for the domestic economy in 2023 but anticipates slower growth of 2.2% in 2024.
PSG based the projection on its analysis of global headwinds that are poised to put the brakes on Namibia’s exports. The adverse impact of higher domestic interest rates on consumption is expected to become increasingly noticeable in the quarters to come.
