The International Monetary Fund (IMF) said this week that Namibia's overall economic outlook is positive, adding in its executive board assessment that a sound macroeconomic management, which, together with a favourable external environment, has led to robust economic growth, subdued inflation, large current account surpluses, and a strengthened foreign reserve position.
The IMF also welcomed the progress made toward achieving the Millennium Development Goals, while noting that much remains to be done to lower the country’s high unemployment and poverty rates.

“Potential downside risks arise mainly from uncertainties regarding the global environment and slow progress in economic diversification. In particular, the key mining sector is vulnerable to deterioration in the terms of trade. Directors also stressed that reforms to accelerate growth in the non-mineral sectors of the economy will be crucial to reduce unemployment and poverty,” the IMF said in its assessment issued in Washington.
Namibia's unemployment rate stands at 37%.
The IMF also emphasised the importance of further progress in addressing the HIV/AIDS pandemic. Namibia is one of the five countries in the world most affected by the pandemic.
“Directors encouraged the authorities to take advantage of the current favourable economic climate to build the necessary political support for key pending reforms,” the IMF said.
The IMF said it considered that the exchange rate peg to the South African rand remained appropriate and stressed the importance of policy interest rate differentials with South Africa to be limited to levels that do not destabilise capital flows or official reserves. The IMF is of the view that despite large current account surpluses, there is no evidence of significant currency under-valuation.
The IMF welcomed the decision to use part of the recent strong receipts from the Southern African Customs Union (SACU) to reduce public debt.
Namibia's real GDP has remained robust and matches regional peers.
Namibia's external current account surplus rose to high levels in 2006 and 2007, reflecting strong diamond exports, high global prices for other mineral exports, and large receipts from the Southern African Customs Union (SACU).
Namibia's strengthened balance of payments position has accommodated a doubling of its international reserves since 2005. Portfolio and other capital investments abroad have also remained at high levels.