Economy to contract by 7.3%
Namibia’s domestic economy is projected to contract by 7.3% in 2020 and recover by 2.6% and 3.2% in 2021 and 2022 respectively, the Bank of Namibia’s (BoN) economic outlook report for December 2020 indicates.
The report availed to Nampa yesterday indicates that the Namibian economy is expected to record the largest contraction in recent history, brought about by the devastating impact of the Covid-19 pandemic.
“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 2021 is expected in both the primary, secondary and tertiary industries particularly uranium mining, beverages, wholesale and retail trade,” the report reads.
The report further said 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, it adds.
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. 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,” the report reads.
Outputs in both the advanced economies (AEs) and emerging market and developing economies ( EMDEs) are expected to contract during 2020. “AEs are expected to contract by 5.8%, while EMDEs are expected to contract by 3.3% in 2020. Output in Sub-Saharan African (SSA) countries is estimated to decline by 3.0% this year. SSA economies are further exposed to various downside risks, which pose threats to their prospects of recovery.
These risks include lower commodity prices, rising debt levels and inadequate supply of energy and water,” it reads. -Nampa