Impact of Slow Global Growth on Namibia

PESA Editorial - Namibia - 1Q2017/18

The Republic of Namibia is one of the least densely populated countries in the world with a total populations of just over 2.3 million and a land area of 824 292 square kilometers. The country is rich with mineral resources; mainly diamonds, uranium, copper, lead, zinc and gold. In 2015, diamond exports accounted for 33% of overall export revenue, this was because of the strong demand from both South Africa and Botswana during that year, which are some of Namibia’s major trading partners1. Namibia also exports diamonds to Belgium, the USA and Switzerland. Copper is Namibia’s second biggest export commodity. Namibia exports its copper to Italy, North Korea, China, South Africa, Saudi Arabia and Germany.

 

The Bank of Namibia estimates real GDP growth to have been 1.0% in 2016. A sharp decline compared to the real GDP growth rate of 5.3% recorded by the National Statistics Agency in 2015. The Bank attributes the decline to the contraction of the diamond mining and construction sectors, but forecasts growth to increase this year and next year. The growth rate of Namibia’s major trading partner, South Africa, is also forecasted to increase from 0.3% in 2016 to 0.8% in 2017. This growth forecast by the IMF supports the Bank of Namibia’s growth forecast for 2017. The Bank’s forest is based on the assumptions that both diamond and uranium production will increase in 2017. Namibia’s major European trading partners are expected to have only modest economic growth while some, such as Germany and China, are forecast to experience a decline in growth. However, the USA’s economic growth is expected to increase from 1.6% in 2016 to 2.3% in 2017. Sluggish economic growth within these major economics will likely adversely impact Namibia’s export revenue.

 

Namibia relies on the revenue it receives as a member of SACU and its trade relationship with both South Africa and Botswana. Therefore, developments in these countries’ economies have the greatest impact on the Namibian economy. China is one of South Africa’s biggest trading partners, and its appetite for raw materials greatly influences the South African economy.

 

Like with many African countries, Namibia’s health system is faced with challenges. Malaria, TB and HIV infection cases are prevalent in the country. The 2016 National HIV Sentinel Survey showed that 17.1% of the population was infected with the disease. The highest infection rates were recorded in the following age groups comprising 30-44 years. The pandemic severely affects the active labor force and could greatly weaken the working population in the future. Should the pandemic not be adequately tackled, the country may find itself relying even more heavily on imported skills in the future. HIV prevention and treatment also presents a strain on the national budget. The 2015 UNAIDS Report estimated 121 147 people living with HIV in the country are receiving antiretroviral treatment. A case of Crimean-Congo Hemorrhagic fever has been reported and the infected person has since died, on 22 February 2017. The health workers who were in contact with the infected patient have been placed under close surveillance and no further cases have been reported.

 

The full uncontrolled outbreak of the disease could not only present a huge health challenge but could also cripple the country’s tourism industry, as tourists would be deterred from visiting the country. In the 2015 National Tourism Expenditure Survey, tourism is recognized as an important driver of economic growth and a means to lessen poverty through employment. The Namibian desert is one of the world’s most renowned places with a wide variety of wildlife. More investment to improve tourism infrastructure would help this infant sector grow from strength to strength, and in turn propel its economy.

 

Namibia has a strong economy and a stable political system. These are some of the fundamental requirements needed for a country to prosper. Its economy is closely intertwined with that of South Africa, hence economic and political developments in its neighbor are of great importance. The only immediate threat to its economy is the HIV pandemic, but with the help of international organisations, the government has put adequate measures in place to fight further increase in new infections of the disease.


1 Namibian National Statistics Agency


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