The Namibian economy is expected to record a growth rate of 2.7 per cent, compared to an upbeat growth of 4.6 per cent recorded in 2022 and 3.5 per cent the prior year.

According to Agribank’s 2023 Quarterly Economic Outlook for the first quarter, the 2023 growth rate is attributed to increases in the primary and secondary industries of 12.9 per cent and 3.3 per cent, respectively.

“The acceleration was observed across all major sectors, particularly the mining sector as diamond production rise, it said.

In 2023, primary industries are expected to remain resilient on the back of the ongoing oil exploration and appraisal activities and robust growth from diamond production from the Benguela Gem mining vessel.

The document availed here, further read that central banks are vigorously fighting inflation; after a long period of price stability, elevated inflation is becoming worrisome for Namibia, unduly affecting low-income households and threatening food security.

Additionally, pandemic-induced inflationary pressures, with demand recovering quickly and supply lagging amid continued disruptions in supply chains, have been persistent, it said.

“While, the country is still dealing with the scars of COVID-19, soaring food and energy prices coupled with renewed supply shocks caused by the war in Ukraine have driven a surge in inflation and pushed up short- and medium-term inflation expectations,” it indicated.

The rise in interest rates by the Bank of Namibia from 3,75 per cent to 7,0 per cent, was prompted by rising inflation and increasing global interest rates, particularly, in South Africa (SA) to maintain the peg.

This translated into a 350 basis points increase in the Repo rate between January 2022 and February 2023.

The document further noted that the upward price pressures will likely ease due to aggressive monetary tightening and slowing demand, but inflation is still projected to remain elevated in 2023 and is expected to average 5.3 per cent in 2023.

Namibia imports most of its inflation and due to the persistent rise in inflation in both SA and Namibia, the Central Banks now find themselves at a crossroads where economic prospects have weakened while inflation is not yet fully under control and fiscal challenges remain, it read.

Source: The Namibian Press Agency