The Namibian economy is expected to improve this year and 2023 building on the moderate recovery it showed in 2021.
Its performance will be aided by improved growth in the mining industry and most tertiary industries.
According to the Bank of Namibia’s February economic outlook report, diamond mining is predicted to grow substantially in 2022 and 2023, as the new Debmarine N$7 billion mining vessel is expected to begin production in the second quarter of 2022.
The diamond mining industry was expected to rise by 2.3 percent in 2021, and then by 26.2 percent and 16.5 percent in 2022 and 2023, respectively.
The growth rate for 2021 has been revised upwards from the 1.2 percent announced in the Bank of Namibia’s (BON) December 2021 Economic Outlook update.
The change was made based on actual production levels, which were bigger than previously estimated.
Additionally, offshore mining production is planned to expand significantly from 2022 onwards, with the new mining vessel set to begin operations.
Meanwhile, despite the concerns of low prices and water supply issues, uranium mining is expected to expand during the forecasted period. The uranium mining industry is predicted to rise by 3.9 percent in 2022 and 6.6 percent in 2023, respectively. The 3.9 percent growth forecast for 2022 represents a slowdown from the 6 percent growth forecast for 2021.
Based on actual quantities generated, BoN’s notes that the growth estimate for 2021 has been reduced downward from 7.4 percent expected in December 2021.
In the medium term, impending risks from low prices for uranium and water supply challenges remain.
In the short-term, however, these risks appear to have eased somewhat, as the spot price for uranium increased to over US$44 per pound during January 2022.
Lost production due to water supply disruptions was less pronounced in 2021 compared to 2020, and mines are constructing onsite water storage facilities to deal with future water crises.
Furthermore, after a marginal recovery in 2021, primary industries are expected to grow at a rapid pace in 2022 and 2023.
Primary industries are expected to increase by 9.6 percent and 8.3 percent in 2022 and 2023, respectively, compared to 0.9 percent growth in 2021.
According to BoN, the mining industry is expected to grow by 26.2 percent in 2022 and 16.5 percent in 2023, with diamond mining expected to grow by 26.2 percent in 2022 and 16.5 percent in 2023.
The central bank also noted that the agriculture, forestry, and fishing industries are projected to grow in 2022.
During the December 2021 Economic Outlook update, primary industries were forecast to rise by 0.3 percent and 7.1 percent in 2021 and 2022, respectively.
Similarly, after a projected recovery in 2021, tertiary sectors are likely to show increased growth rates in 2022 and 2023.
Tertiary industries are expected to grow by two percent in 2022 and 2.5 percent in 2023, up from 1.7 percent in 2021.
Following a projected recovery in 2021, the wholesale and retail trade sector is likely to improve further during the projected period.
The wholesale and retail trade industry is expected to rise by 1.8 percent in 2021 and by 2.0 percent and 3.6 percent in 2022 and 2023, respectively.
The 1.8 percent growth rate in 2021 was revised down from 4.7 percent in December 2021. The revision was made due to poor performance in the fourth quarter of 2021, when total turnover for wholesale and retail trade increased by only 0.6 percent.
After a projected recovery in 2021, the hotel and restaurant sector is expected to expand in 2022 and 2023. The hotels and restaurants sector is expected to grow by 4.8 percent and 6.3 percent in 2022 and 2023, respectively, slowing from 8.4 percent growth in 2021.
This sector’s growth is primarily driven by activities related to local and international travel, and it was one of the most affected by the pandemic, contracting by 31.2 percent in 2020.
In the December 2021 Economic Outlook update, the growth estimate for 2021 was revised up to 8.4 percent from 1.7 percent. This revision was made in response to increased international arrivals as well as room and bed occupancies in the fourth quarter of 2021