THE Bank of Namibia released the Economic Outlook update for December 2020 with the domestic economy expected to contract by 7.3% in 2020, followed by a moderate recovery in 2021.
Giving a briefing on the report from the strategic communication and financial sector development department, Emma Haiyambo stated the world economy is estimated to contract by 4.4% in 2020, and to recover to a growth rate of 5.8% in 2021.
Haiyambo further said that the Namibian economy is expected to record the largest contraction in its recent history, brought about by the devastating impact of the COVID-19 pandemic.
The domestic economy is projected to contract by 7.3% in 2020 and to recover by 2.6 % and 3.2% in 2021 and 2022, respectively.
She stated that the steep contraction in 2020 is driven by sharp declines in hotels and restaurants; mining; transport and storage; manufacturing; wholesale and retail trade and construction.
The improved growth projected in 2020 is expected in both the primary, secondary and tertiary industries particularly uranium mining, beverages, wholesale and retail trade.
The latest growth projection for 2020 represents an upward revision when compared to the August 2020 Economic Outlook, largely due to better performances in primary industries. The latest overall growth estimate of -7.3% for 2020 represents a slight improvement from -7.8% published in the August 2020 economic outlook.
Year-to- date information about economic activity for 2020 so far suggests that estimated contractions in agriculture, forestry and fishing, and in mining and quarrying are likely to be less severe than initially anticipated.
Risks to domestic growth are currently dominated by uncertainty regarding the duration of the COVID-19 pandemic.
Haiyambo further said that risks are linked to ongoing travel restrictions and lockdowns in major economies, exacerbated by the second wave of coronavirus infections. In the medium term, however, such risks may reduce following news of effective vaccines being found.