Bank of Namibia governor Johannes !Gawaxab is confident the Namibian economy will rebound in 2021. The central bank has forecast that the domestic economy will contract by 7.8% in 2020 before recovering to positive growth of 2.1% and 2.7% in 2021 and 2022, respectively. The data for the first half of 2020 shows that the economy contracted by 6.5% on average.
He said the recovery will be attributed mostly to the mining sector on the return of a massive vessel that was out for maintenance but will re-enter production. According to !Gawaxab, the opening of the economy for 10 months will surely have a positive effect on the overall output. The estimated deeper contraction during 2020 is mainly attributed to the outbreak of Covid-19, which has led to travel restrictions across the world and lockdowns in many countries, including Namibia.
The governor made these sentiments at the annual general meeting (AGM) of the Namibia Chamber of Commerce and Industry (NCCI) last week Friday. He stressed that sectors expected to be the most affected by the pandemic during 2020 are hotels and restaurants with -64%, mining, and quarrying with -18.6%, transport, and storage with -11.5%, manufacturing with -9.2%, wholesale and retail trade with -8.9%, and construction with -5.7%.
Domestic inflation remains at historic low levels. Overall inflation averaged 2.2% during the first 10 months of 2020, compared to 4% in the first 10 months of 2019. The decrease was reflected in the inflation for transport and housing during the period under review.
These declines were attributed to the fall in international fuel prices and deflationary pressure in the rental market reflecting weak economic activity. Inflation is projected to decline to an average of 2.3% in 2020 from 3.7% in 2019.
!Gawaxab said it could have been bad if the central bank would have not availed the economic stimulus and relief package of N$8.1 billion which is 4.5% of gross domestic product (GDP) to help cushion the impact of Covid-19 on the economy and households.
“We now are faced with twin challenges, containing the pandemic, including the second wave, and coping with adverse spillovers. Namibia needs to accelerate investment in green energy, water, and agriculture, while the government needs to consolidate at the same time,” he states.
He further stated that Namibia cannot afford another lockdown, and urged residents to adhere to the Covid-19 regulations during the festive season.
Also, on the same occasion, Nangula Uaandja, Namibia senior partner at auditing and tax firm PwC said the country needs to invest in activities that will drive economic recovery. She noted that education should be prioritised to drive diversification and enhance human capital.