WINDHOEK, April 22 (Xinhua) -- Namibia's economy is expected to experience a much deeper contraction this year, compared to the worst contraction recorded in 1993 of 1.6 percent, a researcher from financial service firm PSG Namibia said on Wednesday.
Eloise du Plessis, head of research at PSG Namibia, said the recession is a result of the lockdown amid the COVID-19 outbreak, which has led to a sudden stop in domestic economic activity and international trade and travel.
"This issue caused by the global COVID-19 pandemic has prompted us to lower our real GDP growth forecast for Namibia significantly. We now expect a 7.8 percent contraction this year, compared to IMF's latest forecast of -2.5 percent for 2020," she said.
What complicates matters, du Plessis said, is that a large portion of the population is economically vulnerable due to their dependence on subsistence agriculture. And the government has limited fiscal and monetary space due to high public debt and the currency peg to the South African rand, respectively, to tackle the economic crisis.
"Whether the Namibian economy can defy our expectations is partly outside of its control as travel and trade restrictions could last longer in other countries," the researcher noted.
She added that the efficient implementation of the economic stimulus and relief package of 8.1 billion Namibia dollars (426 million U.S. dollars) and securing further aid and/or debt relief from partners and multilateral organizations are imperative.
"Our baseline is still that the global COVID-19 downswing will be short and sharp. Namibia's real GDP growth is expected to bounce back to 7 percent in 2021, in line with the recovery in global growth to 6.5 percent next year," she noted. Enditem
