The Bank of Namibia says the domestic economy is expected to fall into a deeper contraction during 2020, followed by a moderate recovery in 2021.
In the economic outlook for August 2020 signed off by Emma Haiyambo, the central bank said they expect the domestic economy is estimated to contract by 7.8 per cent in 2020 compared to a lesser contraction of 1.1 per cent in 2019.
Haiyambo is the Director: Strategic Communication and Financial Sector Development Department.
“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 bank said.
According to the central bank, the most affected sectors include hotels and restaurants; mining; transport and storage; manufacturing; wholesale and retail trade; financial and insurance services; and construction.
However, the bank further said, the Namibian economy is projected to recover to growth rates of 2.1 per cent and 2.7 per cent in 2021 and 2022, respectively.
“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 bank also said.
The latest overall growth projection of -7.8 per cent for 2020 represents a downward revision from -6.9 per cent 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.
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.
