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Uncertainties continue to haunt economy

The International Monetary Fund says the country’s outlook remains positive with considerable vulnerabilities and risks.

“Growth is projected to resume in 2018, as mining production ramps up, construction activity stabilizes and manufacturing recovers, before converging to a long-term rate of about 3½ percent, below the average of recent years,” said IMF following consultation in the country recently.

The Fund said inflation is anticipated to remain below 6 percent.

“However, as SACU revenues are expected to decline, in the absence of policy action, the fiscal deficit would remain large and public debt would continue rising and approach 70 percent of GDP by 2022.”

Meanwhile on the positive side, the country’s current account deficit is expected to narrow on average to around 6 percent of GDP on the back of larger mining exports, but international reserve coverage is projected to gradually decline.

IMF forecast indicate that the downside risks dominate the outlook, steming mainly from possible fiscal slippages that could undermine policy credibility, lower demand for key exports, further declines in SACU revenue, and slower recovery in mining and construction activities.

Since 2010, Namibia has experienced a period of exceptional growth. Growth was partly attributable to temporary factors.

An expansionary fiscal policy, the construction of large mines and buoyant credit supported growth and better living standards.

However, robust growth masked rising macroeconomic vulnerabilities and deteriorating productivity performance.

Moreover, structural impediments have contributed to keep unemployment and income inequality unacceptably high.

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