Namibia: 2021 Comes With New Economic Challenges, Despite Positive Growth Prospects - Analyst

The year 2021 is expected to remain under the shadow of the pandemic, despite increasing growth prospects as a result of vaccine roll-outs.

On average, local economists expect the economy to moderately recover in the range of 1.5% (base case) and 3% (best case), stemming from a low base in 2020 and an increase in the demand of exports as major trading partners are projected to recover.

AgriBank's Senior Research and Development Officer Indileni Nanghonga said delays in a global economic recovery could dampen Namibia's growth prospects.

She said although most economies, including SA, rebounded in the third quarter of 2020, Namibia's economy lingers into deeper recession. The economy contracted to 10.5% compared to a decline of 2.1% recorded in the corresponding quarter of 2019.

"The economy will gradually recover to 2.6% in 2021 and 3.2% in 2022 based on the assumption that most countries will open their economies coupled with a gradual uptick in private consumption," Nanghonga said.

While there is hope for an economic recovery, Nanghonga opined, there still exists great uncertainty on a resurgent second wave of the pandemic and its impact on the economy.

"With growth prospects already weighed down by existing challenges, further economic and social interruption by Covid-19 could hurt the country's fiscus and compromise economic recovery, post-Covid-19," she added.

Nanghonga noted that policymakers face daunting challenges ranging from a public health crisis management of rising public debt levels; as well as budget policies, central banking and structural reforms.

Indileni Nanghonga, AgriBank's Senior Research and Product Development Officer.

More From: Namibia Economist

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