Namibia PDNA 2009 - GFDRR

4.1
Macro-economic Impact
This section outlines the impact of the floods on the overall economy. Since the economy is diversified, and the wealth of the nation
is concentrated mostly in the non-flooded area, the flood had a minor impact on the overall macro-economic aggregates. However,
the affected persons constitute more than 60 percent of the total population. While the impact on household assets was minimal, it
was higher on household living conditions. As such, a recovery strategy should consider redistribution aspects.
4.1.1
Pre-disaster Namibian Economy
Namibia is among the strongest performing African
economies, with a GNI per capita of US$4,200 in 2008.
The economy has registered strong economic growth
in recent years, growing by an average of 7.3 percent
during 2004-2006. The main source of growth has been
the booming mining sector, but also tertiary industries,
including Government services, wholesale and retail, and
real estate and business services, which accounted for
59 percent of GDP between 2000 and 2007.
Figure 31: Share of GDP by sector, 2008
Social
14%
Public adm &
defense
8%
Agri & fishing
8%
The economy is highly dependent on the primary sector,
namely the diamond industry, and as such remains
vulnerable to exogenous shocks. Economic growth
slowed to 2.4 percent in 2008 from 4.1 percent in 2007
and estimates for the 2009 growth rate were recently
revised downwards to 1.1 percent in March 2009 10 . The
primary sector is expected to decline by 13.3 percent,
while the tertiary industry is expected to grow by 2.6
percent in 2009.
Real estate
7%
Transp & comm
5%
Construction
4%
Other
15%
Trade
10%
Manuf. & mining
29%
The most developed mining, fishing and meat processing
Source: Namibian Bureau of Statistics, National Accounts, 2008
industries are located in the Karas and Hardap Regions,
which are in south and central Namibia. These areas were not affected by the floods that affected the northern area of Namibia.
Economic activity in the affected areas is mainly subsistence farming, and to some extent, tourism, and there is an unequal distribution
of wealth that follows regional level patterns in Namibia.
Namibia has retained a prudent fiscal policy stance. In 2008, the Government revenue reached 33 percent of GDP while expenditure
was 28.3 percent, resulting in a budget surplus of 4.7 percent of GDP. Receipts from the Southern African Customs Union (SACU)
remain the highest source of Government revenue, constituting 40 percent of total tax revenue. However, trade liberalization in
SACU countries, including the proposed SADC customs union, are expected to decrease tax revenues from international trade in
the medium to long term. A projected decline in Government revenue, expected to fall by 2.3 percent in 2009/2010, coupled with a
projected rise in Government expenditure, will lead to a budget deficit of 0.8 percent GDP in 2009.
The level of domestic debt reached 25 percent of GDP in 2008, while external debt is relatively low, at 8 percent of GDP. Government
plans to finance the fiscal deficit primarily from the domestic market, which has so far been resilient to the global financial crisis.
Namibia’s external position has been strong during the recent years. Namibia is among the top ten countries registering the highest
current account surpluses in middle income countries (18 percent of GDP in 2007), leading to a strengthening of its net foreign asset
position (22 percent of GDP in 2006) and increasing its public and private savings. However the Namibian economy is not impervious
to the global crisis: while the current account balance started to decline and went down to 8 percent of GDP in 2008, it is expected
to only contract further as a result of the global crisis. Forecasts for 2009 estimated the Current Account Balance at 3 percent of
GDP, and a 30 percent decline in value terms of exports, as diamond prices and external demand continue to fall.
10 Macro-economic and Fiscal Framework, March 2009.
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Namibia POST-DISASTER NEEDS ASSESSMENT