The domestic economy is expected to grow by 3% this year and by 2.9% in 2024. This is according to the Bank of Namibia’s Economic Outlook update for March 2023.
In the outlook released yesterday, the central bank projects Namibia’s GDP growth to improve in 2022 before moderating downwards in 2023.
“Real GDP growth is estimated to have increased to 4.2% in 2022, but it is then projected to slow down to 3% in 2023. The estimated growth for 2022 has been revised upwards from 3.9% published in the December 2022 Economic Outlook update, mainly on account of higher production volumes from the diamond mining sector as well as sustained growth for most industries in secondary and tertiary sectors,” the Economic Outlook reads.
Meanwhile, BoN has reiterated that monetary policy tightening globally and high costs of key import items that are likely to remain in force continue to be the main risks to the domestic economy.
“Major central banks in the world continue to tighten monetary policies, a phenomenon that is anticipated to result in a global slowdown in 2023. Furthermore, the war between Russia and Ukraine is likely to continue for longer than expected, and so are the high prices for affected commodities for which Namibia is a net importer, including fuel, wheat and cooking oil. Other domestic risks include water supply interruptions that continue to affect mining production at the coast, energy challenges in the region and uncertainty about the effects of climate change going forward,” the central bank stated.
Also, growth in sub-Saharan Africa is projected to remain flat at 3.8% in 2022 and 2023.
This projection for 2023 has been revised upward by 0.1 percentage point since the October 2022 WEO.
Overall, a subdued outlook for external demand is expected to weigh on the region’s growth prospects with the region’s two largest economies (Nigeria and South Africa) projected to grow by 3.2% and 1.2%, respectively, in 2023.
“Any upside to growth across the Sub-Saharan African (SSA) region is expected to be limited by weakness in external demand and energy challenges in South Africa,” the central bank explained.
Meanwhile, on the global front economic growth is expected to grow moderately in 2022 before slowing down in 2023.
According to the IMF World Economic Outlook (WEO) Update released in January 2023, global growth is estimated at 3.4% for 2022 and is expected to slow down to 2.9% in 2023.
The estimate for 2022 and projection for 2023 are both 0.2 percentage points higher than the forecast from the October 2022 WEO, reflecting greater-than-expected resilience to headwinds across several economies.
Although the 2023 annual growth projection suggests the global economy will avoid a recession, some economies are expected to experience a recessionary period at some point over the course of the year.
In addition, advanced economies (AEs) are projected to experience the sharpest slowdown in growth during 2023. Real growth in the AEs is anticipated to slow to 2.7% in 2022 and to further moderate to 1.2% in 2023.
This slowdown is set to be experienced across roughly 90% of countries in the AEs group, most notably in the euro area and the United Kingdom (UK).
Despite the depressed outlook for the region, there have been upward revisions to the growth projection across most of the AEs since the October 2022 WEO, except for the UK economy.
Moreover, economic activity in Emeging Markets and Developing Economies (EMDEs) is expected to improve marginally in 2022 and 2023.
“Growth in EMDEs is expected to improve slightly from 3.9% in 2022 to 4.2% in 2023 due to upward revisions in China, Russia, Brazil and Mexico. The growth projection for 2023 has been revised upwards primarily reflecting improved sentiment regarding the relaxation of China’s zero Covid policy.
Similarly, the Russian economy fared much better than initially expected following the onset of its war in Ukraine, with its energy exports being redirected away from Western nations.
Hence, its growth projection for 2023 has been revised upwards by 2.6 percentage points from the October 2022 WEO.