THE Namibian economy expected to contract by a massive 7.8% in 2020 due to the COVID-19 pandemic and will only show a moderate recovery in 2021.
The Bank of Namibia released the Economic Outlook 2020 with Director Strategic Communication and Financial Sector Development at the central bank, Dr. Emma Haiyambo stating that the domestic economy is expected to fall into a deeper contraction during 2020.
The domestic economy is estimated to contract by 7.8% in 2020 compared to a lesser contraction of 1.1 % in 2019.
Dr. Haiyambo stated that the estimated deeper contraction during 2020 is mainly attributed to the outbreak of the COVID-19 pandemic, which has led to travel restrictions across the world and lockdowns in many countries, including Namibia.
“The most affected sectors include hotels and restaurants; mining; transport and storage; manufacturing; wholesale and retail trade; financial and insurance services; and construction. The Namibian economy is, however, projected to recover to growth rates of 2.1 % and 2.7 % in 2021 and 2022, respectively,” Dr. Haiyambo said.
The latest projection for 2020 represents a downward revision when compared to the April 2020 update, largely reflected in weaker performances estimated in hotels and restaurants, agriculture, mining, and manufacturing due to the impact of the COVID-19 pandemic.
The latest overall growth projection of -7.8 percent for 2020 represents a downward revision from -6.9 percent published in the April 2020 Economic Outlook Update. Year-to-date information about economic activity for 2020 suggests that estimated contractions in hotels and restaurants, mining, agriculture, and manufacturing on account of COVID-19 pandemic are likely to be weaker than earlier predicted.
Dr. Haiyambo concluded that risks to domestic growth are currently dominated by the COVID-19 pandemic, especially through uncertainty regarding its expected duration. Risks to domestic growth are dominated by ongoing travel restrictions that are in place for many countries, including Namibia. Such measures are restricting business activities and causing disruptions to supply. Other risks to domestic growth outlook include the persistently low international prices of Namibia’s export commodities and adverse climatic conditions.