Bit brighter green shoots forecast

Despite a better outlook for 2021, the Namibian economy remains exposed to risks, especially from the impact of the Covid-19 pandemic.

01 March 2021 | Economics

Risks to domestic growth remain dominated by the impact of the Covid-19 pandemic on the domestic economy, mainly regarding the success of vaccinations in Namibia and around the globe. – Bank of Namibia

Jo-Maré Duddy – Bountiful rains over large parts of Namibia, as well as better prospects for diamond mining and transport convinced the central bank to up its economic growth forecast for 2021 from 2.6% to 2.7%.

Releasing its latest Economic Outlook on Friday, the Bank of Namibia (BoN) said the slight improvement from December last year was “attributed to broad based base effects as well as better growth prospects for diamond mining, agriculture and transport sectors from 2021 onwards”.

The BoN said “information obtained from the latest consultations with industries indicated that growth is likely to be broad based”.

Namibia’s economy is estimated to have grown by -7.3%, the largest contraction in the country’s history. Preliminary growth figures by the Namibia Statistics Agency (NSA) are only expected after the end of April.

The BoN now expects the economy to grow by 3.3% next year, compared to its forecast of 3.2% for 2022 in December.

RISKS

Risks to Namibia’s economy remain dominated by the impact of the Covid-19 pandemic, the BoN said. These mainly regard the success of vaccinations in Namibia and around the globe, the bank said.

“Travel restrictions are still in place in many countries, exacerbated by the second wave of coronavirus infections.”

According to the BoN, other “notable risks to the domestic growth outlook include the persistently low international prices for some of Namibia’s export commodities such as uranium, as well as climatic swings. Namibia is prone to floods in the northern parts of the country, which are likely to occur in 2021, following good rainfalls received.”

REST OF THE WORLD

Growth in Sub-Saharan Africa is expected to strengthen to 3.2% and 3.9% in 2021 and 2022, respectively, from a contraction of 2.6% in 2020, the BoN said.

The 2021 growth projection is 0.1 percentage point higher relative to the October 2020 forecast of the International Monetary Fund (IMF).

Nigeria’s growth is projected to increase to 1.5% in 2021 from a contraction of 2.3% in 2020. Growth in South Africa is also projected to strengthen to 2.8% in 2021 from a contraction of 7.5% in 2020 before moderating to 1.4% in 2022.

The global economy is projected to grow by 5.5% in 2021 and to 4.2% in 2022, from an estimated contraction of 3.5% in 2020. It represents an upward revision when compared to the IMF of October 2020, where the global economy was expected to grow by 5.2% in 2021.

“The projected stronger recovery in global growth during 2021 and 2022 is based on multiple vaccine approvals, the launch of vaccinations in many countries and additional stimulus policy measures in a few large economies,” the BoN said.

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