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Economy expected to recover moderately – BoN

Economy expected to recover moderately – BoN

Business Reporter


NAMIBIA’S economic growth is expected to recover moderately during 2021 and to improve further in 2022, largely supported by better growth for the mining industry, as well as base effects.


This is according to the Economic Outlook report for August 2021 released by the Bank of Namibia (BoN).


The central bank stated that Real GDP growth is projected to increase to 1.4% and 3.4% in 2021 and 2022, respectively, from a contraction of 8.0 % in 2020.


These improvements are mainly on account of base effects and better growth prospects in the mining industry and recovery for most industries in the tertiary sector.


Growth projection for 2022 is now adjusted upwards to 3.4%, largely in line with better growth expectations for secondary and tertiary industries.


HOPEFUL: Picture for illustrative purposes only.


The corresponding forecast in the February 2021 update was 3.3%.


The central bank further noted that risks to domestic growth include new waves of the COVID-19 pandemic, the pace of vaccination roll-outs in Namibia, low international uranium prices and the potential effects of the recent political unrests in South Africa.


In addition, risks to economic growth are also affected by water supply interruptions that affected mining production at the coast.


The appreciation of the Namibia Dollar is likely to put a further strain on the profitability of exporting companies by reducing their earnings.


The impact of the recent political unrest in South Africa could also put further strain on the economic recovery.


The central bank further stated that Sub-Saharan African economies are projected to recover in 2021 and improve further in 2022.


GDP for Sub-Saharan Africa (SSA) is expected to recover to a growth of 3.4% in 2021, before accelerating further to 4.1% in 2022.


The rates of recovery in growth across SSA economies are, however, smaller compared to those in Advanced Economies (AEs) and Emerging market and developing economies (EMDEs).


This is because SSA economies experienced more output losses and had to deal with slower vaccination processes, compounded by limited fiscal policy space in response to the Covid19 pandemic according to BoN.


Besides the normal uncertainty regarding the global economy, the lack of fiscal space and high levels of debt in the region make it risky for fiscal policy to support the much-needed growth, including in large economies such as Angola and South Africa.


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