All industries to shrink by over 6% in 2020
…contraction less severe compared to August projection
BANK of Namibia projects the primary, secondary, and tertiary industries to contract significantly in 2020 before showing a slight recovery in 2021. The primary industries are estimated to record a high contraction during 2020, with a moderate recovery expected in 2021. Primary industries are projected to contract by 6.9% in 2020 and to recover to growth rates of 3% and 7.9% in 2021 and 2022, respectively.
According to the bank, the 6.9% contraction is less severe when compared to a 13.9% contraction projected during August 2020. Significant revisions were done in the mining and quarrying sector, which was expected to contract by 18.6% in 2020 but is now only expected to contract by 10.5% in this financial year.
Furthermore, quarterly national accounts indicated that crop farming posted high growth during the first half of 2020, which is likely to reduce the overall contraction projected for agriculture, forestry and fishing.
Secondary industries are projected to contract in 2020 before also recovering in 2021. Secondary industries are projected to contract by 9.4% during 2020, largely due to expected declines in the construction and manufacturing sectors. Growth in secondary industries is then expected to recover to 3.4% and 2.9% in 2021 and 2022, respectively.
Bank of Namibia noted that the tertiary industries are expected to shrink during 2020 before making a moderate recovery in 2021.
“The tertiary industries are projected to contract by 6% in 2020 and grow by 2.2% and 1.9% in 2021 and 2022, respectively,” reads BoN’s economic outlook for December.
Tertiary industries include sectors that are most affected by the outbreak of the Covid-19 pandemic. A combination of lockdowns across the world, as well as regional and international travel restrictions, is expected to impact negatively on hotels and restaurants as well as transport and entertainment services. There were no significant revisions on most of tertiary industry growth rates in the latest update.
Last week at the monetary policy announcement, the governor of the central bank Johannes !Gawaxab stated that domestic economic activity, though showing some positive signs of recovery in the third quarter, slowed during the first ten months of 2020 compared to the same period of 2019.
“The contraction was mainly reflected in lower activity observed in mining, agriculture, manufacturing, tourism, wholesale and retail trade as well as transport and storage,” he stated.