Domestic economic and financial developments
The 2020 domestic economy hit server contraction due to the COVID-19 implications in the second quarter for 2020 (April-June). Research shows the tourism and transport were hard-hit by the pandemic, which was reflected in poor international visitors’ arrival and lower cargo volume, respectively. Contractions were also noted in the manufacturing, retail, construction and wholesale sectors. Moreover, because of lower inflation on housing, transport and alcohol beverages, the country’s inflation rate decelerated.
However, money supply rose from 7.3% to 14.7% for the same period in 2019. This was chiefly accredited to increased claims of domestic of the depository corporations. The bank lowered its Repo rate over this eight-month period by a record-low of 275 basis points, and the money market rates subsequently eased. Governments total dept increased from 49.2% the initial year to 58.7% this year. The total loan guarantee remained below the government’s set celling of 10% of GDP. The International Investment Position (IIP) recorded an increase net asset position of N$ 6.9 billion and Namibia’s current external sector account registered surplus due to the surplus recorded on the merchandise trade balance. The Namibian Dollar weakened against all major trading currencies from last year’s second quarter, owing the impacts of COVID-19.
International economic and financial developments
The COVID-19 and its associated global lockdown measures resulted in severe global economic contractions, with Chinese economy the only to record a positive GDP growth. The IMF World Economic Outlook predicts the global economy to contract of 4.9% in 2020, the worst recession since the Great Depression of 2008/2009.
Source: Bank of Namibia