Namibia's Economy: An Overview

The Namibia economy’s rate of growth during 2007 is estimated to have slowed by 0.3 percentage points to 3.8%, from 4.1% in the preceding year. This slowdown is in part due to declining growth in the global economy, which fell by 0.1 percentage points to 4.9% over the same period. Meanwhile, the economy in 2008 which was initially projected to increase by 4.7% is revised downward to 3% in December 2008 from an earlier revision of 3.9% in October 2008 on account of the tough financial situation.

The Consumer Price Index (CPI) accelerated from an annual rate of 6.0% in January 2007 to 7.1% in December 2007. Persistent inflationary pressures were witnessed as a result of high food prices, supported by high and volatile international oil prices. In an effort to contain inflationary pressures, the Bank of Namibia tightened the monetary conditions by increasing the Bank rate by a total 150 basis points.

On the fiscal front, Namibia is geared towards fiscal prudence and discipline as part of the overall macroeconomic strategy necessary in laying a foundation for sustainable economic development. In 2006/2007, the country achieved its first budget surplus since independence. Another surplus, amounting to 1.1% of GDP, is projected for 2007/2008. The public debt was successfully reduced to 21.8% of GDP. This ratio is both below the debt target of 25% of GDP and the ‘BBB’ Fitch rating median of 29%.

Real GDP per capita in 2007 improved to N$ 10,400 in 2007 from N$ 10,000 in the preceding year, while N$ 10,900 is projected for 2008. Although there is a noticeable increase in per capita income, distribution of resources remains a challenge – as reflected in the relatively high Gini coefficient of 0.6.