Estimating the Economic Impact of COVID-19: A Case Study of Namibia

Evelina, Julius and Samuel, Nuugulu and Lukas Homateni, Julius (2020): Estimating the Economic Impact of COVID-19: A Case Study of Namibia.

Abstract

The outbreak of the Corona Virus in December 2019 brought panic not only in China and the European continent which were considered the virus’s epicentre, 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, thereby making it difficult for policymakers to formulate an appropriate macroeconomic policy response. The immediate response that countries adopted was the lockdown “stay at home” measure, aiming to avoid movement of people since the virus was believed to spread through contacts with the infected persons. The lockdown also had its own economic impact as it puts halt to most economic activities and operations, with an exception of essential services. In this paper, we estimated the economic impact of the virus on the Namibian economy. The findings are that, an estimated amount of 5 to 7.5 billion Namibia dollars is lost in GDP owing to the impact of the lockdown measures on the various sectors in the primary, secondary and tertiary industries. Due to loss of income, loss of business trading hours and loss of jobs; a loss of private demand (consumption) of N$6 billion to N$12 billion was estimated for Namibia. This loss takes back the country’s private consumption to the level it was 4 to 5 years back. Although the government has already started implementing the fiscal stimulus aimed to cushion the impact of the pandemic, the paper established that a once off income grant aimed 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 efforts to ensure that not so much is lost in the informal sector which the government may need to again issue fiscal stimulus on an already limited fiscal space. Another policy proposal is the need to draw up a post recovery strategy in dealing with the most affected sectors of the economy.

• Item Type: MPRA Paper
• Language: English
• Keywords: COVID-19, lockdown, GDP, Consumption
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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