Green shoots raise hope of economic revival

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Windhoek – Namibia recorded a current account surplus of N$5,1 billion (US$342 million) thanks to increasing exports and stable income revenue inflows in the second quarter of 2020.

The current account surplus followed a drab first three months of a year characterised by decline attributed to low economic output globally due to the COVID-19 pandemic.

Bank of Namibia (BoN) director of strategic Communications Dr Emma Haihambo attributed the upturn to stable revenue inflows from the Southern African Customs Union.

According to the BoN, Namibia’s international investment position (IIP) grew to a net asset position.

“The surplus on the current account during the period under review was due to the surplus recorded on the merchandise trade balance, reflecting a significant decline in import payments and an increase in export earnings, alongside higher SACU earnings.

“The current account recorded a surplus of N$5,1 billion (12 percent of GDP) during the second quarter of 2020, a turnaround from a deficit of N$1,9 billion (US$127 million) in the corresponding period of 2019,” Dr Haihamba said.

Dr Haihamba added: “The stock of international reserves stood at N$31,8 billion (US$2,1 billion) at the end of the second quarter of 2020, representing an import cover of 6,5 months. At the end of the second quarter of 2020, Namibia’s international investment position recorded an increased net asset position of N$6,9 billion (US$463 million) compared to a net liability position of N$11,1 billion (US$745 million) a year earlier.

“The Namibian dollar weakened against all major trading currencies over the year to the end of the second quarter of 2020, mainly on the back of growing concerns over the impact of COVID-19.”

These green shoots of recovery come as economies across the world struggle to regain a firm footing after the new coronavirus triggered what is being described as the worst economic downturn since the Great Depression of the 1920s and 1930s.

Activity in the domestic economy slowed during the second quarter of 2020 compared to the corresponding quarter of the previous year. The slower activities were particularly reflected in the tourism, transport, manufacturing, wholesale and retail trade, construction, and mining sectors and were mainly attributed to COVID-19 pandemic induced effects,” Dr Haihambo said.

“Very weak activity was reflected in the collapse in passenger arrivals in the tourism sector and lower cargo volumes in the transport sector. Moreover, lower output was registered in the manufacturing sector, while real turnover in the wholesale and retail trade sector also declined.”

The construction sector also slowed in the period under review.

“Similarly, in the agriculture sector, livestock marketing activity declined as a result of farmers restocking during the period under review. Signs of improvement were, however, observed in the communication sector during the period under review.

“Namibia’s inflation rate decelerated further during the second quarter of 2020, due to lower inflation for housing, transport, and alcoholic beverages and tobacco,” she said.

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