Economic recovery for 2021, 2022
By Hilary Mare
DESPITE the Namibian economy expected to record the largest contraction in its recent history of 7.3 percent in 2020, it is expected to recover by 2.6 percent and 3.2 percent in 2021 and 2022 respectively.
This has been said by Dr. Emma Haiyambo, the director of strategic communication and the financial sector development department at the Bank of Namibia who also highlighted this week that 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,” Haiyambo 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 percent for 2020 represents a slight improvement from -7.8 percent published in the August 2020 economic outlook. 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 on-going 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,” Haiyambo further explained.
Based on the latest IMF’s World Economic Outlook (WEO) for October, the global economy is expected to contract during 2020, with an improved projection for 2021. The world economy is estimated to contract by 4.4 percent in 2020, and to recover to a growth rate of 5.8 percent in 2021. The estimated 4.4 percent contraction in the global economy is an upward revision when compared to a deeper contraction of 4.9 percent published in the June 2020 WEO update.
“The slight improvement was mainly in line with better than anticipated growth outturns in advanced economies because of the scaling back in Covid-19 induced lockdowns, coupled with signs of an overall stronger recovery during the third quarter of 2020. During the fourth quarter of 2020, however, the second wave of Covid-19 infections resulted in further lockdowns in major economies which may delay a robust global recovery projected for 2021,” explained Haiyambo.
She further highlighted that 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 percent, while EMDEs are expected to contract by 3.3 percent in 2020. Output in Sub-Saharan African (SSA) countries is estimated to decline by 3.0 percent 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. Risks to the global outlook are largely related to the duration and direction of the Covid-19 pandemic with its associated travel restrictions and lockdowns, especially given the second wave of infections,” Haiyambo further said.