Namibia to see lower mineral demand

Namibia will see a decline in the demand for minerals in the coming months as the country’s economic growth is projected to slow down.

The Bank of Namibia says gross domestic product (GDP) will decrease in 2024, mainly due to global influence “affecting demand for our minerals”.

Real GDP is expected to drop to 3,1% from 4,2% recorded in 2023.

“Besides the weak demand, high base effects from the mining industry are expected to exert downward pressure on the 2024 growth for the same industry,” the central bank’s report says.

Additionally, central bank spokesperson Kazembire Zemburuka says domestic growth projections face risks from global monetary policy conditions, the adverse effects of drought, and weakened global commodity demand.

“The global trend of tight monetary conditions could continue to dampen the purchasing power and consumption,” he says.

Zemburuka says the current drought will reduce agricultural output, with water constraints restricting growth in the uranium sector.

“The prevailing drought conditions are likely to dampen agricultural output throughout the forecast period, while strained water resources could restrict growth in output from the uranium sector,” he says.

Additionally, weakened global commodity demand and competition from lab-grown diamonds could hold back growth in the mining sector.

According to the report, high prices in products such as fuel, wheat and cooking oil will continue as the Russia-Ukraine war is ongoing.

“The war between Russia and Ukraine is likely to continue for longer, and so are the high prices for affected commodities for which Namibia is a net importer,” Zemburuka says.

Economist Josef Sheehama says the slowdown in economic activity could cause increased unemployment.

“This is because there aren’t enough jobs being created quickly enough to meet the demand of jobseekers,” he says.

Sheehama says economic activity and unemployment are linked.

“Therefore, when economic activity is high, more production occurs overall, requiring a greater number of workers to produce the increased volume of goods and services,” he says.

Moreover, businesses cut employees during periods of low economic activity, which causes unemployment to increase, he says.