Namibia Economic Outlook
- Economic growth slowed in 2011 but prospects for the medium term remain favourable.
- Risks to the country’s positive outlook include a severe slowdown in the global economy and the structural reductions in the Southern Africa Customs Union.
- The rate of youth unemployment and the incidence of poverty and inequality are high.
The Namibian economy slowed in 2011, reflecting modest performances in mining and agricultural activities. Prospects for the medium term remain favourable with Gross Domestic Product (GDP) growth driven by construction, livestock and crop farming, manufacturing and mining. After years of fiscal surpluses arising from prudent macroeconomic policies, the fiscal situation has deteriorated substantially, reflecting the global economic crisis and expansionary policies to support growth.
Namibia’s membership of the Common Monetary Area (CMA) severely weakens the role of monetary policy. The dual currency system in the country, with the Namibian dollar (NAD) and the South African rand (ZAF) in circulation, means that the country has limited monetary instruments and the main lever of policy discretion of the Bank of Namibia (BoN) is to maintain a different repo rate from that set by the South African Reserve Bank. Risks to Namibia’s positive outlook include a severe slowdown in the global economy resulting from the sovereign debt crisis in the Eurozone and the structural reductions in the Southern Africa Customs Union (SACU).
Namibia’s future is also overshadowed by massive challenges of poverty, high unemployment and inequality. The country is confronted with a high average unemployment rate of 51.2%, and 80% for the young aged 15 to 19 if jobless people not actively seeking work are included. The high youth unemployment rate is mainly attributable to an educational system that does not equip learners with the skills required in the labour market, although the education sector receives the highest share of the national budget. Namibia does not have an employment policy, but there are several programmes targeting young people, including the National Youth Service, which provide young people with the required skills through vocational training and support them in starting their own businesses.
