Namibia's growth outlook tempered by infrastructure, global risks

Namibia's economy is showing promising signs of growth, with improved sentiment and an encouraging outlook. This positive momentum, however, masks a range of significant challenges that threaten to undermine progress, according to Cirrus Capital."The improved sentiment is tangible and the growth outlook is encouraging. However, this does not mean we are without any risks or challenges," Cirrus Capital stated in its economic outlook for 2025. This assessment highlights a crucial point: while the current economic climate appears favourable, it's essential to acknowledge and address the potential headwinds.One key challenge stems from the very successes Namibia has achieved. "Some of our successes bring with them their own challenges. For instance, the strong growth in logistics and transport is not without cost; the impact on our infrastructure. The heavy reliance on road transport is degrading roads and increasing congestion, which need to be tackled especially as trade for our land-locked neighbours appears set to grow," Cirrus Capital explained. The rapid expansion of these sectors has placed a significant burden on the country's infrastructure, particularly its road network. This strain is further compounded by the growing volume of trade with landlocked neighboring countries, necessitating urgent investment and strategic planning to avoid bottlenecks and further deterioration.Global economic uncertainties also pose a threat. "Global trade wars and the risk of conflict will impact commodity prices. This may benefit us, for instance higher prices for commodities we produce or transit, for example copper, but may also drive higher domestic prices, especially oil and exchange rate volatility. Decent domestic growth, and stronger purchasing power, will also drive inflation particularly from the housing side," Cirrus Capital cautioned. Furthermore, Cirrus Capital emphasised the long-term risks associated with climate change. "Weather patterns are also a long-term concern, with an agriculture sector that will be devastated if we are hit with drought again in the next few years. Beyond this, limited water supply means that key economic areas and sectors are at severe risk - particularly the central areas. While there are many proposed long-term solutions, the lack of action and urgency means these solutions are perpetually long-term," Cirrus Capital said. Cirrus Capital also highlighted the critical issue of unemployment and poverty. "The unemployment and poverty in the country are also a major risk. Beyond the impact on livelihoods and development, both near- and long-term, these present massive political risk. This has already started manifesting itself in reduced support for the governing party, although this is a sign of maturing democracy," they observed. The report acknowledges the political implications of high unemployment and poverty, noting the declining support for the governing party. However, it also warns of the potential for more extreme consequences. "However, the extreme levels of unemployment and poverty risk increasingly reactionary and populist policy. The temptation grows as the fiscal position improves, and more so should there be hydrocarbon wealth," Cirrus Capital concluded.

Namibia's growth outlook tempered by infrastructure, global risks

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Republikein 2025-04-02

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Namibia's growth outlook tempered by infrastructure, global risks

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