Investment in energy and transport will buoy economy

Like the curate’s egg – the risk assessment for Namibia is good in parts. According to credit insurer Coface, the country failed to take full advantage of the soaring prices of raw materials in 2008, with the production of minerals limited by a deficient energy supply. And despite the upward trend of copper and uranium extraction in 2009, economic growth is likely to feel the impact of the decline in world prices. On the positive side, public sector investment in energy and transport infrastructure will continue to buoy the economy while the decline in oil and foodstuff prices will help ease inflation in 2009. A solid but slightly deteriorating financial position The current account, however, could slip into deficit in 2009, undermined by the rising cost of imports and the depreciation of a Namibian currency pegged to the South African rand. Political stability but with growing social risk Despite remarkable political stability, Namibia has been contending with major social challenges, says Coface. A near 20% AIDS prevalence rate compounded by a 28% poverty rate represents an obstacle to development of an economy handicapped by a lack of skilled labour, according to Coface. Another weakness is the country’s insufficiently diversified productive fabric, with its economy largely resting on raw material exploitation and thus vulnerable to external shocks. Economic growth has not succeeded in significantly reducing either a 35% unemployment rate, the highest in the SA Customs Union, or a 28% poverty rate. Namibia is ranked 125th out of 177 countries for its human development index. A 20% AIDS prevalence rate – among the highest in Africa – has also impeded Namibia's development.