Covid-19 to ravage economy

Covid-19 to ravage economy Jo-Maré Duddy



Annual growth in Namibia's tourism sector can plummet to -85% under the Bank of Namibia's current worst case scenario, driving overall economic growth in the country to an all-time low of -12.2%.

The central bank's updated economic forecast for 2020, released on Tuesday, currently expects baseline growth of -64% for hotels and restaurants – a proxy for tourism. Its baseline growth forecast for the overall economy is -7.8%.

In April, when the BoN released its previous forecast, it expected overall economic growth of -6.9% and -58% for tourism.

The BoN's latest baseline forecast for overall economic growth this year is lower than the -3.2% expected for Sub-Saharan Africa.

It is also worse than the International Monetary Fund's forecast of -4.9% for the world.

Namibia has been stuck in a recession since 2016. Annual economic growth for the years were: 2016 (-0.3%); 2017 (-0.3%); 2018 (0.7%) and 2019 (-1.1%).



'Devastating impact'

“The Namibian economy is expected to record the largest contraction in its recent history, induced by the devastating impact of the Covid-19 pandemic, which is felt across most sectors,” the BoN says in its latest outlook.

According to the central bank, risks to domestic growth are currently dominated by the Covid-19 pandemic, “especially through uncertainty regarding its expected duration”.

“Risks to domestic growth are dominated by ongoing travel restrictions that are in place for many countries including Namibia.

“Such measures are restricting business activities and causing disruptions to supply,” the BoN said.

Other risks to Namibia's growth and outlook include the persistently low international prices of Namibia's export commodities, and climatic swings, the central bank added.