By Staff reporter
WINDHOEK, MARCH 9 — The Bank of Namibia recently released its Economic Outlook update for March 2023, and it appears that the domestic economy is projected to grow by 3.0 percent in 2023 and by 2.9 percent in 2024. While global economic growth is expected to grow moderately in 2022 before slowing down in 2023, the IMF World Economic Outlook (WEO) Update released in January 2023 indicates that global growth is estimated at 3.4 percent for 2022 and is expected to slow down to 2.9 percent in 2023.
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 percent in 2022 and to further moderate to 1.2 percent in 2023. This slowdown is set to be experienced across roughly 90 percent of countries in the AEs group, most notably in the Euro Area and the United Kingdom (UK).
Economic activity in Emerging Markets and Developing Economies (EMDEs) is expected to improve marginally in 2022 and 2023, with growth in EMDEs expected to improve slightly from 3.9 percent in 2022 to 4.2 percent 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.
Sub-Saharan Africa (SSA) is expected to have limited upside to growth due to weakness in external demand and energy challenges in South Africa, with growth projected to remain flat at 3.8 percent in 2022 and 2023. The projection for 2023 has been revised upward by 0.1 percentage points since the October 2022 WEO.
Namibia’s GDP growth is projected to improve in 2022 before moderating downwards in 2023. Real GDP growth is estimated to have increased to 4.2 percent in 2022 but is then projected to slow down to 3.0 percent in 2023. The estimated growth for 2022 has been revised upwards from 3.9 percent 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.
However, there are risks to domestic growth in the form of monetary policy tightening globally and high costs of key import items that are likely to remain for the entire forecast period. 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.
In conclusion, the Bank of Namibia’s Economic Outlook update for March 2023 paints a mixed picture of the global and domestic economy. While there are upward revisions in the growth projections for China, Russia, Brazil, and Mexico, there are concerns about the war between Russia and Ukraine, surging inflation, and tighter financial and monetary conditions. In Namibia, the diamond mining sector and the secondary and tertiary sectors have contributed to the upward revision in the growth projection for 2022, but there are still risks to growth, including water supply interruptions and energy challenges in the region. – Namibia Daily News
