BoN: Coronavirus an ‘unfolding catastrophe’

The IMF has warned that the spread of the coronavirus could derail a "highly fragile" projected recovery in the global economy in 2020.

21 February 2020 | Economics

Let’s … do whatever needs to be done to prevent it from coming here. – Iipumbu Shiimi, Governor: BoN

Jo-Maré Duddy - The coronavirus is a “catastrophe that is still unfolding” and it is too early to estimate its impact on Namibia, the governor of the Bank of Namibia (BoN), Iipumbu Shiimi, says.

At his monetary policy announcement on Wednesday, Shiimi said the impact of the virus globally is already evident in companies closing in China.

If the Chinese economy slows down, Namibia will feel the impact, Shiimi said.

One of the domestic sectors that might be affected is tourism, the governor said.

“Let’s keep our fingers crossed and do whatever needs to be done to prevent it from coming here,” Shiimi said.

The BoN's new economic outlook is expected soon. In its last forecast, issued in July 2019, the BoN forecast economic growth of 0.8% for this year and 1.2% in 2021.

‘Stark reminder’

Also on Wednesday, the International Monetary Fund (IMF) said the coronavirus epidemic has already disrupted economic growth in China and a further spread to other countries could derail a "highly fragile" projected recovery in the global economy in 2020.

In a note for G20 finance ministers and central bankers, the global lender mapped out many risks facing the global economy, including the disease and a renewed spike in US-China trade tensions, as well as climate-related disasters.

IMF managing director Kristalina Georgieva said the outbreak was a stark reminder of how unforeseen events could threaten a fragile recovery, and urged G20 policymakers to work to reduce other uncertainties linked to trade, climate change and inequality.

"Uncertainty is becoming the new normal," Georgieva wrote in a blog posted on the IMF website. "While some uncertainties - like disease - are out of our control, we should not create new uncertainties where we can avoid it."

Sticking to forecast

Despite the outbreak, the IMF said it was sticking to its January forecast for 3.3% growth in the global economy this year, up from 2.9% in 2019. It represents a downward revision of 0.1 percentage points from its forecast in October.

It said the recovery would be shallow and could be derailed by re-escalation of trade tensions or a further spread of the disease, which had already disrupted production in China and could affect other countries through tourism, supply chain linkages and commodity prices.

China has said it could still meet its economic growth target for 2020 despite the epidemic.

Georgieva said the IMF expected only a small reduction in China's gross domestic product growth unless a protracted outbreak worsens the slowdown. – Additional reporting by Nampa/Reuters

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