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Fitch downgrades Namibia to BB, cuts 2019 economic forecast

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Fitch downgrades Namibia to BB, cuts 2019 economic forecast

Fitch Ratings downgraded Namibia's long-term issuer default ratings to BB from BB+ and warned that the country is set to record its third consecutive year of recession in 2019.

The downgrade reflects "the mutually reinforcing" deterioration in Namibia's economic growth and fiscal metrics, Fitch said. The rating agency now expects the country's economy to contract 1.2% in 2019, compared with a previous projection of a 0.7% expansion, amid weak domestic demand and tepid regional economic activity in the wider Southern African region.

"GDP will merely stagnate over 2016-2021 in our forecasts, and Namibia will achieve the third-weakest economic performance among all Fitch-rated sovereigns during that period," according to the rating agency.

The muted prospects for Namibia's economy will raise "significant challenges" for the government as it plans to rein in spending in order to stabilize the country's debt levels, Fitch said. General government debt is projected to rise to above 51% of GDP in the fiscal year ending March 2022 from 45% in the year ended March 2019.

Fitch also affirmed Namibia's short-term issuer default ratings at B and downgraded its national long-term ratings to AA-(zaf) from AA+(zaf).