Economy in the toilet
30 April 2020 | Economics
The economy is expected to contract by 6.9% this year, the Bank of Namibia said in a quarterly economic update released this week.
The slowdown in economic activity is a consequence of the coronavirus pandemic, the central bank noted. “The deep contraction estimated for 2020 is attributed to the outbreak of the coronavirus, which led to travel restrictions across the world and lockdowns in many countries,” the Bank of Namibia said. The Namibian economy was expected to show modest recovery of 1.5% this year, the central bank's previous projections showed.
“The 6.9% contraction estimated for 2020 is a severe deterioration from a 1.5% growth that was projected in the February 2020 update. The sectors expected to be most affected by travel restrictions include hotels and restaurants, mining and quarrying, and beverages, among others. This forecast assumes that travel restrictions will remain in place until the end of July 2020.”
All sectors hit
The mining sector, which falls under the primary industry, is expected to contract by 14.5%. Mines were required to scale down production to stem the spread of the coronavirus.
“Primary industries are projected to record a huge contraction during 2020, with a moderate recovery expected in 2021.
Primary industries are projected to contract by 9.8 percent in 2020 and to recover to a growth of 3.1% in 2021. The 9.8% contraction is much deeper when compared to a growth of 2.6 percent published in the February 2020 update. The mining industry is now expected to contract by 14.5%.”
Diamond mining is expected to show the deepest decline in the entire sector, marking an almost 15% reduction in its growth.
“Diamond mining is projected to contract in 2020 before a solid recovery in 2021. The diamond mining sector is forecasted to decline by 14.9% in real terms during 2020 and to recover to a growth of 4.5% in 2021.
The secondary sector, which comprises manufacturing and construction, will also contract in 2020.
The construction sector is also expected to go through a difficult period. The secondary industries are projected to contract by 5.2% during 2020, largely due to expected declines in the construction and manufacturing sectors.
“Growth in the secondary industries is then expected to recover to 2% in 2021. The manufacturing sector is projected to contract during 2020 before a slight recovery in 2021. The manufacturing sector is projected to contract by 4.9% in 2020 before growing by 2.3% in 2021.
The contraction in the construction sector is expected to deepen during 2020 as projects are likely to be delayed. The construction sector is expected to contract by 16.3% and 1.5% in 2020 and 2021.
The tertiary sector is also not expected to escape unscathed.
Tertiary industries are expected shrink during 2020 before making a moderate recovery in 2021. The tertiary industries are projected to contract by 6.1% in 2020 and grow by 1.4% in 2021. The projected contraction of 6.1% in 2020 is a downward revision from a mild contraction of 0.4% published in the February 2020 economic outlook update.
The wholesale and retail trade sector is expected to contract in 2020 and then to recover marginally in 2021. The wholesale and retail trade sector is projected to contract by 6.3% in 2020 and to grow by 1.5% in 2021.