Namibia is a small country of about 2.5 million people, with a long coastline on the South Atlantic, bordering South Africa, Botswana, Zambia and Angola. It is the driest country in Sub-Saharan Africa, and is rich in mineral resources, including diamonds and uranium. Political stability and sound economic management have helped anchor poverty reduction and allowed Namibia to become an upper-middle income country. However, socio-economic inequalities inherited from the past apartheid system remain extremely high and structural constraints to growth have hampered job creation.
After experiencing average annual growth of 4.4% between 1991 and 2015, Namibia’s economy fell into recession in 2016 and has since struggled to recover. Namibia is largely dependent on investments in mineral extraction and government spending, and has suffered from falling commodity prices, weak growth in key trade partners (Angola, South Africa) and tight fiscal policy on the back of government’s effort to rebalance public finances.
The COVID-19 (coronavirus) pandemic is set to have an unprecedented impact on Namibia’s economy and has exacerbated preexisting structural challenges. Real gross domestic product (GDP) contracted by 7.4%t year-on-year (y-o-y) over Q1-Q3 2020. The mining sector, which is an important earner of foreign exchange, contracted by 12.2% y-o-y affected by domestic factors and falling global demand (especially diamonds). On the back of local and foreign travel restrictions, the hospitality industry recorded a large contraction of 46.5% y-o-y. Overall, GDP is expected to have contracted by 7.3% in 2020. Going forward, the growth outlook is subject to significant uncertainty given the unknown profile of the pandemic and likelihood of further restrictions in activity if additional infections waves materialize. Structural policy reforms will be required to raise Namibia’s growth potential.
Source: World Bank, Namibia Country Overview
Access the Namibia SDG Investor Map narrative report here.
