Though largely desert and ranchland, Namibia’s natural mineral riches and
Namibia has a long, inhospitable coastline along the South Atlantic, and borders South Africa, Botswana, and Angola.
The Namibian economy slowed substantially in 2016, registering only modest growth of 1.2%, which contrasts with average, annual gains of more than 5% in the preceding five years. The slowdown was noticed across all productive sectors, tied to consistently low mineral prices, regional drought, and a process of fiscal consolidation. Subdued growth in the global economy has also affected mining in Namibia, delaying the startup of the already-completed Husab uranium mine. This has yielded significant negative spillovers to many sectors of the economy, including external trade and public sector finance.
The deterioration of economic activity and lower revenues, mostly from mining and the Southern African Customs Union (SACU), led to temporary problems in terms of financing the budget in the first half of FY2016/17. Given the fact that private financial institutions had little appetite for government securities, state-owned pension funds were the largest bidders at auctions during the second and third quarters of 2016. Consequently, there was little to no space for further fiscal expansion, and a process of fiscal consolidation began with the mid-year budget review of October 2016.
In the medium-term, economic activity is expected to slowly recover. Annual GDP growth may reach 3% in 2017 and about 4 % thereafter. Near-term recovery will be driven by the (hoped for) opening of operations at the Husab uranium mine in 2017. Services are expected to contribute significantly, too, as neighboring Angola’s economy gradually picks up. A limited, additional boost should stem from
Last Updated: Oct 13, 2017