The revision of the Outlook to Negative reflects Namibia's weak growth performance and our downward assessment of growth prospects with adverse implications for the government's ability to stabilise the public debt trajectory, the rating agency said.
It noted that the Namibian economy is yet to rebound from the downturn that followed the 2010-2015 mining and construction boom.
“Our previous expectation of a gradual growth recovery in 2018 has not materialised,” it said, adding that GDP declined for the 10th consecutive quarter in third quarter of 2018.
“We now expect a more tepid economic recovery in 2019, given the weaker starting point and persistent headwinds. We forecast GDP to grow by 0.7% in 2019 (versus our earlier forecast of 1.8%) and 2.0% in 2020, well below the current 'BB' median of 3.2%,” Fitch said in a statement.
In their reaction, financial analysts at Simonis Storm said they are not surprised by the Fitch decision to downgrade Namibia.
“With debt to GDP expected to remain on an upward trajectory coupled with sluggish GDP growth over the next 2-3 years, we believe that the outlook will remain negative (Moody’s) with a possible negative (currently Stable) outlook by Fitch,” the said. “We agree with Fitch’s statement that the stabilisation of the government debt-to-GDP ratio could lead to a stabilisation of the Outlook going forward”.