CHAMWE KAIRA
The diamond mining sector is expected to register a contraction during 2024 and relatively low growth rates during the remainder of the forecast period, mainly due to weakened global demand and shifting of demand from natural diamonds to lab-grown diamonds, based on the latest Bank of Namibia latest statistics.
The central bank added that growth of the uranium mining sector is expected to slow in 2024 on account of stripping activities at some of the mines. Uranium growth is then anticipated to increase in 2025, supported by improved spot prices.
The agriculture, forestry and fishing sector is projected to experience a contraction in growth throughout 2024 and 2025. This deceleration is primarily attributed to the anticipated severe drought conditions associated with the expected El Niño event.
The metal ores sub-sector is projected to contract in 2024 and 2025, following robust growth in 2023, attributed to reduced production due to depressed zinc prices and anticipated scaling down in gold production.
Central bank expects the overall real GDP growth to decelerate in 2024 and rebound in 2025.
“The slowdown reflects subdued global demand impacting the mining sector, especially diamond and zinc production, alongside constraints in uranium output due to strip-mining activities. Adverse drought conditions further add to economic challenges, particularly affecting agriculture and water sectors,” the central bank said.
The local economy is domestic growth is projected to slow down in 2024 before improving in 2025. Real GDP growth is anticipated to slow down to 3.1% in 2024 before accelerating to 3.9% in 2025.
“This moderation in growth during 2024 is primarily attributed to a subdued performance within the primary sector, particularly in mining and agriculture. The latest estimate for the 2024 GDP growth represents a downward revision from 3.7% published in the March 2024 Economic Outlook update. When compared to March 2024 projections, the downgrading of 2024 growth is mainly based on worse than earlier anticipated performance for the whole primary sector and for the construction sector,” the central bank said.
The domestic growth projections for Namibia face substantial risks from global monetary policy tightening, adverse drought effects, and weakened global commodity demand. The global trend of tight monetary conditions could continue to dampen purchasing power and consumption, the central bank said.
“Drought conditions threaten agricultural output, while strained water resources could disrupt various sectors. Additionally, weakened global commodity demand, particularly for diamonds and zinc, could lead to a deterioration in the mining sector’s performance.”
