Namibia worries about inflation.

Namibia's high per capita income in relation to other African countries (see chart below) reflects the success of its extractive industries as opposed to the strength of its consumer base. In fact, Namibia has one of the biggest income gaps in the world.

For example, one authoritative source, the CIA's World Factbook, estimates that half the population is engaged in subsistence farming.

For its small consuming middle class, however, recent years have meant positive improvements. In its review of Namibia's economic prospects for 2007, released in February 2007, the Bank of Namibia (BoN) said that private consumption would grow 3.9 percent in 2007 compared with 3.8 percent in 2006. The BoN said the growth was due to salary increases.

These salary increases, and rising oil and food prices, are contributing to worries about inflation. According to a report in The Namibian (Windhoek) on July 3, 2007, the rate of inflation increased to 7.1 percent in May 2007. The newspaper added, "Inflation which has [been] on [an] upward trend since last year, reached an average of 6.1 per cent during the first quarter of this year, compared to an average four per cent registered during the corresponding quarter of 2006."

In response to these inflationary pressures, in June 2007 the BoN raised its repo rate 0.5 percent to 9.5 percent.

The Namibian quoted a BoN official as saying, "There have been also signs of the second round effects of food and oil price inflation, evidenced by the upward trend in the inflation of the other categories in the consumer price index basket."

Inflationary worries aside, Namibia's macroeconomic performance has been sound. Citing a report by the African Development Bank (ADB) as its source, the newspaper New Era (Windhoek) said, "Namibia has experienced robust economic growth over the past six years, which averaged 4.5 percent and is expected to accelerate to five percent this year and in 2008."

The International Monetary Fund (IMF) estimates Namibian growth at 4.8 percent in 2007, and 4.6 percent for 2008.

NAMIBIA HAS SERIOUS HUMAN DEVELOPMENT CHALLENGES

The population growth rate for Namibia is above the regional average, due in part to a birth rate of 29 per thousand inhabitants, which is higher than the average of 24 per thousand for Southern Africa. Job creation has not kept up with growth of the labor force in recent years, and it is not likely that the situation will improve further in 2007. Unemployment is running about 37 percent, and this continues to deflate consumer confidence.

Namibia's population reached 2.1-million people mid-2006, which amounted to just under 4.0 percent of Southern Africa's 54-million inhabitants. According to data released by the Population Reference Bureau (PRB), Namibia's population will reach 2.5-million by 2025. Also, according to that source, Namibia is going to have a population of 3.1-million people in 2050.

The PRB revealed that a low 33 percent of Namibia's population lived in urban areas during 2006, and that the country's population density is a very low 6 people per square mile. In land area, Namibia is approximately the same size as Pakistan. But Pakistan has almost 80 times as many inhabitants. The CIA's World Factbook, indicates that 38 percent of Namibia's population was birth to 14 years old in 2006, while 58 percent was 15 to 64 years old, and 4 percent of the populace was 65 years of age and over.

The CIA estimates that the country's population growth rate will be 0.48 percent in 2007. According to the United Nations Population Division, in the year 2050, 25 percent of Namibia's population will be birth to 14 years old, while 68 percent will be aged 15 to 59, and 7 percent of the populace will be 60 years of age and over.

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