Namibia’s economy will grow by 1 percent in 2009, down from 2.7 percent in 2008, with diamond output, the mainstay of the economy, shrinking by nearly 50 percent, the central bank said here on Tuesday.
The Bank of Namibia (BoN), which warned that the future was very uncertain, said falling export revenue, especially exports of diamonds, would seriously hurt Namibia’s narrowly diversified economy.
Presenting the BoN’s economic forecast for 2009, the central bank said that diamond mining production would fall by 47.9 percent in 2009 and achieve zero growth in 2010.
Diamond mining contributes about 10 percent in gross domestic product (GDP) to Namibia’s economy and about 40 percent of export revenue.
The output of diamonds fell by 9.9 percent in 2008, BoN governor Tom Alweendo told economic analysts and journalists in the capital.
“No great expansion projects are expected to be undertaken in the short term due to the difficulty in raising capital in the current economic environment and the general worldwide slowdown in consumer demand, especially in America, the biggest buyer of diamonds,” Alweendo said.
“Diminishing onshore diamonds are also a contributing factor to the number of carats produced by the sector,” the bank said.
Growth in export of good and services is expected to slump by 9.1 percent in 2009, down from an estimated growth of 14.5 percent in 2008.
The bank however said the rest of the mining sector, buoyed by increased interest in the uranium mining sector, would attain positive growth while the agricultural and fisheries sector are expected to offer a gleam of hope for the economy.
The BoN said that the agriculture sector would grow by 4 percent this year, with manufacturing growing by 4.3 percent and he secondary industry by 5.2 percent.
The central bank also said that the construction sector would grow by 10 percent due to increased construction activities related to mining activities.
The bank, which had all along kept a tight lid on its key lending rate, said it had slashed its repo rate by 100 basis points to 9 percent.
