major macro economic indicators
|2014||2015||2016 (f)||2017 (f)|
|GDP growth (%)||6,5||5,3||4,2||5,3|
|Inflation (yearly average) (%)||5,3||3,4||6,6||6,0|
|Budget balance * (% GDP)||-5,9||-8,1||-9,2||-8,3|
|Current account balance (% GDP)||-10,7||-13,0||-12,5||-6,9|
|Public debt (% GDP)||23,6||33,7||42,0||46,9|
(e) Estimate (f) Forecast
*Fiscal year: from April to March
- Considerable mineral resources (diamonds, uranium, copper)
- Tourism potential
- Good transport infrastructure
- Political stability
- Dependence on the mining sector (almost 50% of exports)
- Dependence on South Africa
- Very high unemployment (28%) and high levels of inequality
Higher growth in 2017
Economic activity is expected to increase in 2017. Uranium production will increase sharply, in connection with increased capacity at the Husab mine, exploitation of which will begin in the first quarter of 2017, making the country the world's third largest producer. More broadly, the mining sector is expected to pick up, against a backdrop of moderate increases in prices for mining products. Specifically, increased production at the Otjikoto gold mine and the Tschud copper mine, commissioned in 2015, will sustain activity. Diamond mining is also expected to confirm its recovery. Meanwhile, the agricultural sector is expected to recover fro the intense drought caused by El Niño in 2016. Moreover, the development of livestock rearing appears promising, given that exports of Namibian beef have been authorised on key markets (United States, Hong Kong and China) since 2016. At the same time, the manufacturing, transport and communications sectors are likely to remain lively. Namibia has a sophisticated financial system. However, government cuts in investment spending will impede progress on infrastructure projects, which could in turn hamper construction.
Inflation, fuelled by high prices in South Africa, Namibia's main supplier, specifically of food, is expected to remain strong in 2017. The rather tight monetary policy could prevent it from exceeding the 6% target set by the monetary authorities.
Decline in twin deficits
In 2016, the public deficit widened significantly as a result of the government's expansionary fiscal policy adopted in order to support growth. However, in autumn 2016, the government embarked on a process of fiscal consolidation, which should help reduce the deficit in 2017. This is because, a decline in capital spending is anticipated, while current spending will remain stable and still directed towards the key sectors (health, education…). At the same time, income related to mining exports will boost revenues. Moreover, customs duties returned to Namibia under the South African Customs Union, which contribute about a third of the country's tax receipts, will remain modest. Finally, although tax collection is not ideal, progress will start to be made once a new tax office has been established at the beginning of the 2017/2018 financial year.
In 2017, the public debt could still exceed the cap of 35% of GDP set by the government. In essence this is local debt (70%), mostly denominated in Namibian dollars and in South African Rands.
The current account deficit could narrow in 2017. Exports will be higher, especially those of uranium. The expected increase in the price of and demand for diamonds (almost 27% of exports) will thus boost exports of mining products. In addition, the economic partnership agreement, providing for duty-free and quota-free access to the European market, concluded in June 2016 between the European Union and six countries of the Southern African Development Community (including Namibia), will offer promising trade prospects. Namibian exports will remain vulnerable to the evolution of growth in South Africa (the country's primary trading partner, accounting for almost a quarter of exports), which will remain weak in 2017. Finally with the expected slowdown in infrastructure projects, imports of capital goods are likely to be less dynamic.
In 2017, the Namibian dollar, pegged to the South African rand, will continue to be vulnerable to the downward pressure and high volatility of South Africa's currency.
Stable political context and satisfactory performances on governance
The Swapo, in power since independence (1990), dominates the political stage. Its candidate, Hage Geingob, was elected as president with 87% of the votes cast in November 2014, succeeding H. Pohamba who, under the constitution, was unable to stand for a third term. Meanwhile, the opposition remains split and is struggling to make itself heard. The measures in favour of education, social spending and employment are expected to continue to contain social tensions. Progress on combatting poverty, inequality and unemployment are subject to the effectiveness of the Harambee Towards Prosperity for All(2016-2021) development plan, which includes a social support programme. The country is among best-ranked countries in Sub-Saharan Africa according to the World Bank's governance indicators. Its performances, which are improving with regard to the rule of law and political freedom, are deteriorating with regard to the fight against corruption (ranked 73rd in 2015 against 71st in 2010) but are still better than those of most countries in the region. Namibia is ranked 108th out of 190 in the 2017Doing Business Index.
Last update: January 2017