Namibia’s Gross Domestic Product (GDP) growth is projected to moderate in 2024, primarily due to subdued global demand, coupled with drought conditions. In its latest economic outlook, the Bank of Namibia (BoN) forecasts the domestic economy is projected to grow by 3.5% in 2024, a slowdown from the 4.2% growth recorded in 2023.
“This projection, however, marks an upward revision from the initial 3.1% estimated in the August 2024 Economic Outlook. 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 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. However, growth is projected to rebound to 4.0% in 2025, supported by improving global conditions and domestic policy measures to boost economic growth,” BoN stated.
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. The 2025 growth projection for crop farming was also increased as the sector is expected to converge towards the long-term trend following two years of substantial contractions.
Sub-Saharan Africa
Growth in the Sub-Saharan African economies is estimated to slow in 2024 before improving in 2025. In Sub-Saharan Africa, growth is projected to slow down to 3.6% in 2024 before improving to 4.2% in 2025 as adverse impacts of prior weather shocks subside and supply constraints gradually ease.
According to the October 2024 World Economic Outlook, the latest projection for 2024 largely reflects slower growth in Nigeria, amid weaker-than-expected activity in the first half of the year. Nigeria is one of the economies in the region that has been affected by a severe drought. On the contrary, growth for South Africa was revised upwards by 0.2 and 0.3 percentage points, respectively, reflecting positive post-election sentiment and improved power supply.
Emerging markets
Growth for emerging markets and developing economies (EMDEs) is projected at 4.2% for 2024 and 2025, a slowdown from 4.4% in 2023. The anticipated moderation in growth for EMDEs reflects a sustained slowdown in the region’s two largest countries, China and India. Growth for the Chinese economy is projected to slow down gradually, mainly due to persistent weaknesses in the real estate sector and low consumer confidence. Despite the stated weaknesses, growth is only projected to slow by 0.4 percentage points to 4.8% in 2024, attributed to better-than-expected net exports. Growth in China is projected to slow down further to 4.5% in 2025 due to the ageing population and low productivity growth. In the face of weakening growth, the Chinese Central Bank announced a stimulus package in September 2024, which included lowering interest rates to reduce borrowing costs, reducing reserve requirements for commercial banks, and further availing US$28 billion for local government investment projects. In India, GDP growth is expected to moderate to 7.0% in 2024 and 6.5% in 2025, from 8.2% in 2023. The downward moderation in growth is attributed to the normalisation of growth, as base effects influenced the 2023 growth rate as the economy was still recovering from the effects of the pandemic.
Global economy
Meanwhile, the central bank projects global economic growth to remain steady. “The world real GDP growth is projected to moderate downwards from 3.3% in 2023 to 3.2% for 2024 and 2025,” BoN states. According to the IMF’s World Economic Outlook (WEO) for October 2024, the anticipated moderate growth is attributed to the lagged impact of the tight monetary policy, and increased geopolitical risks. Nevertheless, the projected global growth for 2024 remained unchanged from the July 2024 WEO update, while the growth rate for 2025 was revised downwards by 0.1 percentage points. In the meantime, BoN noted that major revisions were observed in advanced economies, particularly the Euro Area, with France and Germany experiencing notable weakness in their manufacturing sectors. Similarly, a forecast from the Organisation for Economic Cooperation and Development (OECD) signals a cooling in global growth to 3.2% in 2024 and 2025 from 3.3% in 2023.
Advanced economies are projected to register flat growth in 2024 and 2025. “Specifically, growth for advanced economies is estimated to remain steady at 1.8% in 2024 and 2025, supported by a combination of country-specific dynamics, as inflation pressures unwind and economic activity converges towards long-term growth levels. Governments in advanced economies are expected to tighten their fiscal policy stances in 2024 and 2025, while interest rates are projected to ease. The latest growth projection for 2024 was revised upward by 0.1 percentage points, compared to the similar projection in the July 2024 World Economic Outlook Update,” the central bank stated.