NAMIBIA

Key conditions andchallenges

Table 1

2023

Population, million

a2.6GDP, current US$ billion

12.4

GDP per capita, current US$4740.3

International poverty rate ($2.15)

b15.6
b33.3

b57.3

Lower middle-income poverty rate ($3.65)
Upper middle-income poverty rate ($6.85)
Gini index

b59.1

School enrollment, primary (% gross)c133.0c

59.3

Total GHG emissions (mtCO2e)

25.0Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Latest official estimates. Preliminary results from the2023 census suggest a population of 3.0 million vs the 2.6
million used here.
b/ Most recent value (2015), 2017 PPPs.
c/ WDI for School enrollment (2022); Life expectancy(2021).

Namibia’s economy grew by 4.2 percent
in 2023. GDP growth is expected to remain above 3 percent over the medium
term, subject to high uncertainty aroundthe possible implementation of large-scaleenergy projects. Fiscal policy over themedium term is expected to be centeredaround maintaining primary budget surpluses to support the stabilization of thepublic debt ratio. Poverty (at the $2.15line) is expected to improve but remainhigh at 17.2 percent in 2024.

Since 1990, Namibia has made significant
progress on economic and social indicators. Over the two decades to 2015,
GDP growth averaged 4.5 percent, supported by sound macroeconomic policies
and the commodity super cycle, whichspurred mining investment. The country
attained middle-income status in 2009,
and the poverty rate declined. Natural resource revenues allowed for an increasein public spending, including on social
programs to support households, and on
increased access to public services, including education and health. Despite
this progress, many social indicators continue to lag peers, and there are significant spatial and gender disparities. Although demand for services has markedly increased, job creation outside the extractive sectors has been insufficient.
Consequently, unemployment has remained stubbornly high, exacerbated byskills shortages. Most of the working
population is engaged in low-skilled
work in the informal sector. The country
remains among the most unequal in theworld (Gini index at 59.1 in 2015).
The immediate years leading up to theCOVID-19 pandemic in 2020 were marked
by a recession, driven by the end of thecommodity cycle, the completion of major
investment projects, a severe drought, andfiscal consolidation. This underscored theneed for a structural shift from the current

growth model based on extractives and alarge state presence in the economy, whichlimits competition, export diversification,and creates inefficiencies.
While the public sector continues to facefiscal constraints, given high public debt
levels, there are opportunities to improve
spending efficiency. Recent developmentsin the mineral and energy sector provide
Namibia with opportunities to develop
new drivers of growth and employment
through economic diversification and value chain development. The realization ofthese opportunities hinges on structural reforms that reduce the costs of doing business and promote international
trade and investment.

Recent developments
Namibia’s recent economic performance
was stronger than expected. The economy grew by 4.2 percent in 2023, driven
by the mining sector, including investments in oil exploration. The expansion
was also generated by sustained growth
in private consumption. The economy
has recovered its pre-pandemic level, butmany key sectors, including job-rich construction and financial services, continue
to lag. Due to stronger GDP growth inboth 2022 and 2023, poverty is estimatedto have improved but remains high at 17.8
percent based on the US$2.15 per day international poverty line (IPL; 2017 PPP).
Investments in the extractive industries
has shaped not only Namibia’s recent
growth trajectory but also the balance ofFIGURE 1 Namibia / Mining activity and real GDP growth

FIGURE 2 Namibia / Actual and projected poverty rates andreal GDP per capita

Real index (2018Q1 = 100)
140

Poverty rate (%)

125

Real GDP per capita (constant LCU)

80

70000

7060000

60
110

50000

50

40000

4095

30000

3080

20000

2010000

1065050
2018Q1 2018Q4 2019Q3 2020Q2 2021Q1 2021Q4 2022Q3 2023Q2
Real GDPMining
Non-mining02009 2011 2013 2015 2017 2019 2021 2023 2025

Sources: National Statistics Agency and World Bank staff estimates.

International poverty rate

Lower middle-income pov. rate

Upper middle-income pov. rate

Real GDP pc

Source: World Bank. Notes: see Table 2.

MPO

1Apr 24payments. Despite strong export growth,
the current account deficit remained large
in 2023 as services imports rose sharply.
The wide current account deficit was sufficiently financed by rising foreign direct
investment inflows. To facilitate the development of a large-scale green hydrogen industry, the government is developing aroadmap for the sector that aims to allow
the domestic economy to benefit from thedevelopment of related value chains.
The overall fiscal deficit balance improved from 5.2 percent to 3.7 percent
of GDP between 2022 and 2023 due tothe GDP recovery and the significant
rebound in SACU revenues, which increased by 72 percent. These additional
revenues were largely absorbed intohigher expenditure commitments, including higher interest payments,
drought relief, and one-off costs related
to the population census.
Monetary policy remained restrictive,
broadly in line with the stance of theSouth African Reserve Bank. Credit
growth remains subdued, and the current stance helped to curb headline inflation, which decreased to 5.3 percent in
December 2023.

OutlookNamibia’s economic growth is projected tomoderate to about 3-3.8 percent per year
over 2024-26. This projection is subject tohigh uncertainty as the economy could beimpacted by the speed of implementationof several large-scale projects in the energy
and mining sectors. If these projects moveinto the construction phase during this period, the growth rate of the economy could
substantially accelerate through a combination of foreign direct investment inflows
and spillovers to the local economy.
Growth in the non-mineral economy is expected to gain traction, especially in sectors that have been severely set back by
the pandemic, including tourism. Household consumption growth is expected tostrengthen, benefiting from improved income growth and lower inflation, which isprojected to reduce to 5.0 percent in 2024.
The poverty rate under the IPL is projected
to decrease to 17.2 percent in 2024.
After the stimulus, driven by the increase
in SACU revenue in FY2023/24, budget
expenditure growth is expected to slow

TABLE 2 Namibia / Macro poverty outlook indicatorsin the medium term. However, fiscal consolidation is expected to be slower thanbudgeted for in the medium term, impacted by increased expenditure commitments and lower SACU revenues from2025. The large public sector wage billis expected to continue to constrain fiscal
space. Given high debt levels and highinterest payment costs, fiscal policy
should remain prudent to ensure a sustained decline in the debt-to-GDP ratio
over the medium term. The budget plan
to retire two-thirds of the US$750 million
Eurobond maturity in October 2025, using accumulated savings from the sinking
fund, should support a faster reductionin the debt-to-GDP ratio.
Namibia’s economic outlook is favorable,
but there are significant downside risks on
the horizon. Dependent on the attainmentof final investment decisions, Namibia’s
economy could experience a sizable investment boost in the mining and energy sectors over the coming years, which wouldredefine its growth trajectory. However,
the recovery faces major downside risks
from global geopolitical tensions, whichcould undermine global economic activity,and climate shocks.

(annual percent change unless indicated otherwise)

Real GDP growth, at constant market pricesPrivate consumption
Government consumption
Gross fixed capital investment
Exports, goods and services
Imports, goods and services

2021
3.6
14.6
1.3
18.0
-2.1
20.2

2022
5.3
9.5
0.6
10.0
22.9
23.0

2023e
4.2
4.7
1.0
69.3
14.1
22.7

2024f
3.4
4.8
1.3
8.3
4.1
6.1

2025f
3.6
5.2
0.7
9.6
4.4
6.8

2026f
3.8
5.3
0.6
9.6
4.7
6.8

Real GDP growth, at constant factor prices
Agriculture
Industry
Services

1.5
1.6
0.5
1.9

4.6
1.7
11.3
2.2

4.0
-3.4
9.2
2.7

3.4
0.5
6.6
2.2

3.6
2.0
6.7
2.2

3.8
2.0
6.9
2.3

Inflation (consumer price index)

3.6

6.1

5.9

5.0

4.7

4.6

Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)

-11.2
6.7

-12.9
8.4

-11.1
17.9

-10.4
9.4

-10.2
9.4

-9.9
9.4

Fiscal balance (% of GDP)
Revenues (% of GDP)

-8.5
29.9
73.1
-4.2

-5.2
30.9
72.8
-0.7

-3.7
33.2
70.2
1.4

-3.9
32.4
67.9
1.0

-4.6
29.1
66.7
0.1

-4.3
28.4
64.9
0.4

19.7
38.0
62.3

18.3
36.6
60.8

17.3
35.6
59.7

17.0
35.1
59.2

16.5
34.7
58.6

16.1
33.9
58.0

0.5
14.9

2.1
15.1

1.1
15.8

2.4
15.9

3.2
16.2

3.4
16.5

aDebt (% of GDP)
Primary balance (% of GDP)b,cInternational poverty rate ($2.15 in 2017 PPP)b,cLower middle-income poverty rate ($3.65 in 2017 PPP)b,cUpper middle-income poverty rate ($6.85 in 2017 PPP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ Refers to Public and Publicly Guaranteed debt.
b/ Calculations based on 2015-NHIES. Actual data: 2015. Nowcast: 2016-2023. Forecasts are from 2024 to 2026.
c/ Projection using neutral distribution (2015) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.

MPO2Apr 24