BoN lowers economic growth forecast for 2021

PHILLEPUS UUSIKUDomestic growth is projected to increase to 1.4% and 3.4 % in 2021 and 2022, respectively, from a contraction of 8.0% in 2020. According Emma Haiyambo, director for strategic communication at the central bank, these improvements are mainly on account of base effects, better growth prospects in the mining industry and recovery for some industries in the tertiary sector. The latest estimate of 1.4% growth in 2021 represent a downward revision from the 2.7% that was published in the February 2021 Economic Outlook update. A significant downward revision was made on growth for diamond mining based on revised output targets by the industry. Other major downward revisions to growth between February 2021 and August 2021 were made for all secondary industries, she pointed out.According to Simonis Storm, the mining environment remains favourable and the re-opening of the Kombat mine planned for the end of 2021 together with the commissioning of the new diamond mining vessel during the first half of 2022 will turn the sector’s performance around.In general, the revised lower economic growth is largely attributed to new variants of the Coronavirus, vaccination hesitancy and slow vaccination rates in Namibia that were not expected during the February 2021 update, Haiyambo said.Growth in Sub-Saharan Africa is expected to recover to 3.4% in 2021 before accelerating to 4.0% during 2022, from a contraction of 1.9% in 2020. VACCINESSimilarly, emerging market and developing economies are projected to recover to a growth of 6.3% in 2021 before moderating to 5.2% in 2022. Advanced economies are projected to expand by 5.6% in 2021 before moderating to 4.4% in 2022, compared to a contraction of 4.6% in 2020. The expected recovery amongst advanced economies will be supported by wide vaccine coverage and fiscal support in most countries, the director said.Risks to domestic growth includes new waves of the Covid-19 pandemic, the pace of vaccination roll-outs in Namibia, low international prices for uranium and the potential effects of the recent political unrests in South Africa. Risks to domestic growth are dominated by new waves of the Covid-19 pandemic, which culminated in travel restrictions that are still in place for many countries, vaccine hesitancy and the pace of vaccinations in Namibia. Other risks include persistently low international prices for uranium, which have already squeezed margins of local mines as their long-term supply contracts started to run out, she added.Water supply interruptions that affected mining production at the coast have become less severe but remain a significant risk going forward. The appreciation of the Namibia dollar is likely to put a further strain on the profitability of exporting companies by reducing their earnings. The impact of the recent political unrest in South Africa could also put a further strain on the economic recovery, Haiyambo said.

BoN lowers economic growth forecast for 2021

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BoN lowers economic growth forecast for 2021

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