The Namibian economy is expected to gradually recover from the current recession, the International Monetary Fund (IMF) said on Tuesday.
After years of robust growth, the Namibian economy has been struggling, with gross domestic product (GDP) declining in 2017 as the temporary stimulus from large investments in the mining sector dissipated and the government continued consolidating to stabilize public debt dynamics.
Head of a visiting IMF delegation, Geremia Palomba, said the Bretton Woods institution anticipates that the Namibian “economy will recover gradually.”
“Growth is expected to strengthen over time, and converge to a long-term rate of about 3 per cent, below the average of recent years, held back by low productivity growth and stagnant competitiveness,” Palomba said in a statement.
Real GDP is projected to contract in 2018, albeit at a lower rate, and turn positive in 2019, supported by strong mining production and a rebound in construction activities.
Palomba said downside risks to this outlook include lower-than-expected revenue from the Southern African Customs Union and fiscal slippages that could undermine policy credibility and debt sustainability.
However, key challenges facing the southern African country are to continue implementing fiscal consolidation plans to contain public debt dynamics and preserve macroeconomic stability, and pursing reforms to raise productivity, long-term growth, and job creation, Palomba explained.