The Bank of Namibia expects the domestic economy to contract by 6.9% in 2020, following a milder contraction of 1.1% in 2019. This is according to its economic outlook update for April 2020, which was released yesterday.
“Namibia’s economy is expected to contract substantially during 2020, due to Covid-19 induced travel restrictions and lockdowns. The domestic economy is projected to contract by 6.9% in 2020 before recovering moderately to a positive growth rate of 1.8% in 2021. The projected contraction of 6.9 percent in 2020 follows a milder contraction of 1.1% in 2019. The deep contraction estimated for 2020 is attributed to the outbreak of the Covid-19 pandemic, which led to travel restrictions and a lockdown in Namibia, as is the case with other countries globally,” read a statement by Emma Haiyambo, BoN’s Director for Strategic Communication and Financial Sector Development.
Haiyambo added that risks to domestic growth are currently dominated by uncertainty regarding the expected duration and final impact of Covid-19 on the economy.
“Risks to domestic growth are dominated by ongoing travel restrictions and causing disruptions to supply. Other risks to domestic growth and outlook include the volatile and persistently low international prices of some of Namibia’s export commodities,” Haiyambo explained.
According to the International Monetary Fund’s World Economic Outlook for April 2020, the global economy is expected to contract substantially in 2020 before recovering in 2021. The world economy is projected to contract by three percent in 2020, which is a sharp reversal from a positive growth rate of 3.3% published in January 2020. The downward revision to 2020 growth is largely attributable to anticipated lower industrial production, and volatile commodity markets, primarily due to the worsened impact of the Covid-19 outbreak. Global output, however, is projected to expand by 5.8% in 2021.
Meanwhile, output is expected to contract in both advanced economies (AEs) and emerging market and developing economies (EMDEs) during 2020. Advanced economies are expected to shrink by 6.1% in 2020 before recovering to a positive growth of 4.5% in 2021. Advanced countries that are expected to contract substantially in 2020 are the United States (-5.9%), United Kingdom (-6.5 percent), Germany (-7.0%), Italy (-9,1%) and Spain (-8,0%).
Emerging Market and Developing Economies (EMDEs) are projected to contract by 1.0% in 2020, before recovering to a positive territory in 2021.
Excluding China, however, the projected contraction for these economies in 2020 could be more severe at 2.2%. Going forward, EMDEs are expected to experience a sharp recovery in 2021 once the adverse effects from the pandemic subside.
On the other hand, China is expected to grow by 1.2% in 2020, which is a decrease from 6.1% in 2019. Similarly, India’s growth is expected to decline to 1.9% in 2020, from 4.2% in 2019. The economies of Russia and Brazil are projected to contract by more than five percent in 2020, while the South African economy is expected to contract by 5.8% in 2020 before recovering to positive growth of 4.0% in 2021
“Risks to the global growth are largely due to the Covid-19 pandemic. There is uncertainty regarding the duration of the Covid-19 pandemic and related travel restrictions and lockdowns. Furthermore, there is the risk of countries experiencing a re-emergence of infections once efforts at containment are relaxed. Another risk to global growth is the associated volatility of international commodity prices,” Haiyambo stated.
2020-04-29 10:08:08 | 3 months ago