Real GDP growth of 3% is expected in 2022 and 3.2% in 2023; preserving macroeconomic stability, promoting structural reforms and protecting the most vulnerable is key to fostering inclusive growth led by the private sector and reducing unemployment and inequality; Advancing the authorities’ fiscal consolidation strategy is crucial to preserving debt sustainability.
A team of International Monetary Fund (IMF) staff, led by Ms. Giorgia Albertin, IMF Mission Chief for Namibia, conducted a virtual mission from September 20 to October 5, 2022 to conduct the discussions of the 2022 Article IV consultation with Namibia.
At the conclusion of the mission, Ms. Albertin made the following statement: “After a sharp contraction due to the COVID-19 pandemic, the Namibian economy has started to recover.
Real GDP growth reached 2.7 percent in 2021 as mining activity picked up and tertiary sector activities began to recover.
The recovery strengthened in the first half of 2022, thanks to sustained growth in mining and stronger manufacturing activity.
No new cases of COVID-19 were recently reported.” “Inflationary pressures have increased as higher international oil and food prices, due to the war in Ukraine, have passed through to the domestic economy.
Average headline inflation rose to 5.6 percent in August, reflecting rising food and transportation prices.
“Real GDP growth of 3 percent in 2022 and 3.2 percent in 2023 is expected, supported by strong diamond, gold and uranium production, and recovering tourism.
Average inflation would rise to 6.4 percent in 2022 and start to moderate in 2023.
The current account deficit would remain large, financed by oil and gas FDI inflows and one-time transactions.
The fiscal deficit is expected to narrow, supported by strengthening tax revenues and fiscal consolidation measures.
“Collateral effects of the war in Ukraine, the slowdown in the world economy and the weakening of non-oil commodity prices could further exacerbate inflation, worsen imbalances and undermine the recovery.”
“Preserving macroeconomic stability, promoting structural reforms and protecting the most vulnerable is key to fostering inclusive, private-sector-led growth and reducing unemployment and inequality.” “The implementation of the authorities’ fiscal consolidation strategy is crucial to preserve debt sustainability.
It is key to contain the salary mass, advance in the reform of state companies and strengthen the tax administration.
In parallel, it is important to preserve social spending and public investment that supports growth and mitigate the impact of rising food and fuel prices on the poorest.
The strengthening of the public financial framework will support fiscal consolidation”.
As inflationary pressures build, keeping the policy rate in line with the SARB rate and an adequate level of reserves will support the currency peg and anchor inflation.
Strengthening the resilience of the financial sector and managing macrofinancial risks will support financial stability.”
“Structural reforms to support economic diversification and improve productivity are making progress.
Improving the business climate, fostering access to finance, strengthening governance and reducing skills mismatches are key to fostering growth.