Namibia: Economic Review and Prospects 1999/2000

The global economy has found its way out of crisis. The East Asian economies have bounced back, the USA continues to grow robustly, and Europe has recovered. African economies are set to grow steadily in 2000. This positive world outlook provides an enabling environment for growth of the Namibian economy through increased demand for its exports. Developments in South Africa, Namibia's main trading partner, also look increasingly positive. Considerable progress has been made in economic policy reform, resulting in improved long-term growth prospects. A growth rate of more than 3% is expected there. Provisional growth estimates for 1999 are 3.7%. Growth in 2000 is expected to be higher - it may reach or even exceed 5%, and will thereby be a real increase on a per capita basis. The Namibian Dollar, linked to the Rand, is expected to hover around its current 6.50 per US$. In line with the development in South Africa, inflation will remain at around 7- 8%. This growth will be based primarily on growth in agriculture, fisheries, mining, construction, tourism, trade, and transport & communication. Having had good rains, agriculture will grow by more than 4.5%. The fishing sector will grow in excess of 7%, which will stimulate the fish processing sector. Mining, benefiting from higher global growth, will increase its output by some 4%. Similar growth rates are expected for the manufacturing sector. For the tourism sector, expectations have been downgraded owing to spill- over from the Angolan conflict, to some 7% growth. Because of increased demand and planned investments, both trade and transport & communication will grow stronger by some 7%. Growth of the public sector is expected to slow down from 4.8% in 1999 to 4% in 2000. Due to this growth pattern, where growth is concentrated in traditional sectors, the diversification into manufacturing and service sectors will remain limited. NEPRU's third annual business climate survey again provides interesting esults. Further trade liberalisation is welcomed by the majority of businesses. Business performance in 1999 improved moderately with an increased demand. Capital investment in 1999 increased. The business climate was generally regarded as more ositive than in 1998, and the outlook for 2000 is optimistic on the whole. The key concerns of the business community are crime and the lack of skilled labour.