Forecasting the Economic Impacts of COVID-19: A Case for the Namibian Economy

ABSTRACT

The outbreak of the corona virus in December 2019 brought panic not only in China and the European continent where it was most pronounced when it started, but worldwide. In Africa, the cases of the virus increased significantly since February 2020. The evolution of the disease and its economic impact is, however, uncertain, making it difficult for policymakers to formulate an appropriate macroeconomic policy response. The immediate responses that countries adopted were lockdown "stay at home” measures, aiming to avoid movement of people since the virus was believed to spread through contact with infected persons. The lockdowns also had their own economic impacts as they put a halt to most economic activities and operations, with an exception of essential services. In this chapter, we estimated the economic impact of the virus on the Namibian economy. The findings are that an estimated 3-5 billion Namibia dollars has been lost in GDP owing to the impact of the lockdown measures to the various branches in the primary, secondary and tertiary sectors. Due to loss of income, business trading hours and jobs, a loss of private demand of N$6 billion to N$12 billion was estimated for Namibia. This loss returns the country's private consumption to the level it was 4-5 years back. Although the government has already started implementing the fiscal stimulus aimed to cushion the impact of the pandemic, this chapter established that the income-grant designated for the unemployed and lost income is far lower than the lost income due to the lockdown. Among the proposed policy recommendations is the need to allow the informal sector to operate under specified conditions in an effort to ensure that not so much is lost in the informal sector to which the government may need to again issue fiscal stimulus monies in an already limited fiscal space. Another policy proposal is to draw up a post recovery strategy dealing with the most affected sectors of the economy. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022.