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Finance and Public Enterprises Minister Iipumbu Shiimi says the projected economic recovery is not expected to address pervasive and entrenched national challenges.

Tabling the national budget, Shiimi said it is therefore urgent that Namibia's economy be diversified.

With the domestic economic outlook having improved significantly, gross domestic product growth was estimated at 5.6% in 2023, before moderating to 4% in 2024 and 3.9% in 2025.

The strong growth is anchored by upbeat activities in the natural resources sector, including the residual impact of ongoing petroleum exploration on domestic economic activities and the surge in uranium production following price increases. 

In addition, sentiments have also broadly improved across many other sectors of the economy, including tourism, transport and storage, financial services, and electricity generation.

The Finance Minister pointed out that strong economic activities largely reflect a recovery in the traditional engines of domestic growth, particularly the mining sector, which is highly capital-intensive.

But he stressed that this would not address a number of pressing challenges. 

"As such, the projected economic recovery is not expected to address the pervasive and entrenched national challenges, such as high unemployment, poverty, and income inequalities. Consequently, the urgency of the need to diversify the economy remains a key cornerstone of the fiscal and economic policy framework moving forward. This would require the government to create a conducive environment by addressing the identified binding constraints to growth and addressing existing policy coordination barriers. That could facilitate the faster emergence of new engines of growth, especially in sectors with the potential to create high-quality jobs. In this vein, we will continue to implement the Economic Diversification Strategy and integrate it into the upcoming sixth National Development Plan."

In addition, Shiimii said the government will pursue potential new industries through the green industrialization agenda, which not only promises to diversify Namibia's exports but can also increase the complexity of the national economy.

"On a positive note, however, the surge in growth and the resultant improvement in public revenues have created a much-needed avenue for stronger structural reform momentum, which could bolster productivity with positive spillover effects on the broader economy. Furthermore, the government can use the boost in public revenues to address the acute infrastructure backlog, especially in the areas of housing, railways, water, education, and health."

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Peter Denk