Coronavirus and the World Economy
The coronavirus has arrived in the most remote place of the World and 213 countries and territories are affected. Namibia had 14 447 cases a month ago and has currently 25 116 cases and 215 deaths. South Africa had 796 472 cases a month ago and currently they have 1 088 889 cases. The latest cases and deaths are the following:
Table 1: Coronavirus cases – 03 December to 03 January 2021
| Region/Country | Cases03 Dec | Cases03 Jan |
| China | 86 597 | 87 117 |
| Europe | 14 287 437 | 19 867 286 |
| Africa | 2 158 781 | 2 777 596 |
| North America | 14 781 622 | 21 505 518 |
| Rest of the World | 33 938 335 | 40 864 891 |
| Total | 65 252 772 | 85 102 408 |
Source: worldometers.info
Since the beginning of December most new cases were in Northern America and Europe. The Rest of the World was still 52.4% in the beginning of December and the share has declined to 48.0%. There is a second wave in Europe currently with subsequent restrictions announced. The US remains on top of the list with reported 20.9 million cases and 358 743 deaths. Only 3.3% of the reported cases and 3.6% of the deaths are on the African continent.
Table 2: Coronavirus deaths – 03 December to 03 January 2021
| Region/Country | Deaths03 Dec | Deaths03 Jan |
| China | 4 634 | 4 634 |
| Europe | 354 912 | 472 906 |
| Africa | 52 429 | 66 481 |
| North America[1] | 293 358 | 374 458 |
| Rest of the World | 770 885 | 927 281 |
| Total | 1 507 103 | 1 845 760 |
Source: worldometers.info
[1] North America is Canada and the US
The African continent reported 2 777 596 cases and 66 481 deaths. There are only 1 258 187 cases reported in the SADC region and 32 150 deaths. South Africa is dominating SADC with 86.5% of the cases and 90.7% of the number of deaths.
Table 3: Coronavirus cases and deaths in the SADC region – 03 December- 03 Jan 2021
| SADC country | Cases03 Dec | Cases03 Jan | Deaths03 Dec | Deaths03 Jan |
| South Africa | 796 472 | 1 088 889 | 21 709 | 29 175 |
| Namibia | 14 477 | 25 116 | 151 | 215 |
| Zambia | 17 730 | 21 582 | 357 | 394 |
| Mozambique | 15 918 | 18 968 | 132 | 168 |
| DRC | 12 987 | 17 998 | 336 | 595 |
| Madagascar | 17 341 | 17 767 | 251 | 262 |
| Angola | 15 319 | 17 608 | 351 | 407 |
| Botswana | 10 742 | 14 805 | 34 | 42 |
| Zimbabwe | 10 129 | 14 491 | 277 | 377 |
| Eswatini | 6 455 | 9 711 | 122 | 227 |
| Malawi | 6 040 | 6 712 | 185 | 192 |
| Lesotho | 2 145 | 3 206 | 44 | 65 |
| Mauritius | 508 | 527 | 10 | 10 |
| Tanzania | 509 | 509 | 21 | 21 |
| Seychelles | 183 | 297 | – | – |
| Total | 926 955 | 1 258 187 | 23 980 | 32 150 |
Source: Worldometers.info
Belgium is on top of the list with the number of deaths per population and Andorra has the most cases.
Table 4: Worst affected countries according to deaths and cases
| Country | Deaths/1M pop. | Total cases/1M pop. |
| Belgium | 1 691 | |
| Slovenia | 1 348 | |
| Italy | 1 241 | |
| Peru | 1 138 | |
| Czechia | 1 116 | |
| Andorra | 1 086 | 105 602 |
| Montenegro | 77 783 | |
| Luxembourg | 74 216 | |
| Czechia | 69 081 | |
| USA | 63 000 | |
| South Africa | 489 | 18 244 |
| Germany | 416 | 21 168 |
| Namibia | 83 | 9 615 |
Source: Compiled from Worldometers data
The trend in the Namibian reported number of cases of Covid-19 experienced a third wave in the beginning of December and it seems that a turning point was reached at the end of December which is visible from the 3 day moving average with a slightly declining trend.
Graph 1: The Namibian Covid-19 cases
With an estimated world population of 7.8 billion in 2020, the total number of 85.1 million cases is 1.1% of the world population and the number of deaths is 0.02%.
The World economy is steaming ahead with the monthly increase of 14.12% in the Baltic Dry Index (The Baltic Dry Index provides a benchmark for the price of moving major raw materials by sea).
Table 6: % change in USD- selected international commodity prices
| Commodity | Monthly | Yearly |
| Winners for Namibia | ||
| Energy: Brent oil | 9.24% | -21.79% |
| Gold | 3.68% | 0.10% |
| Uranium | 4.24% | 23.29% |
| Copper | 1.10% | 25.83% |
| Zinc | -0.90% | 21.08% |
| Lead | -3.26% | 0.10% |
Source: Trading economics. 03 January 2021
The commodity prices relevant to Namibia reached a turning point in June and seem they have reached a plateau at the end of December. Oil prices increased in the past months by 9.24%. The exchange rate has strengthened in the past months and the N$ is currently trading 14.62 to the US Dollar and 17.97 to the Euro.
The domestic economy
During December the economic data of the third quarter was released. It is clear that the Namibian economy is still in a deep recession.
Graph 2: Quarterly real GDP growth
Source: Namibia Statistics Agency
The preliminary data of real growth in Quarterly GDP shows an average growth of -7.3% for the first 3 quarters. Government did not reduce its expenditure and therefore the decline in economic growth was not so severe. Revenue reduced but debt increased substantially so that public servants could maintain their living standards. Total government debt stood at N$ 91.4 billion at the 3rd quarter of 2019 and increased by N$ 15.17 billion within a year to N$ 106.6 billion in the third quarter of 2020.
Debt as percentage of GDP is currently at 60.7% and will become unsustainable if Government is not reducing government expenditure.
Graph 3: Public debt as percentage of GDP since independence
Source: Bank of Namibia
The only positive economic news in the 3rd quarter was that new vehicle sales improved after the lock down in April.
Graph 4: Quarterly New Vehicle sales
Source: Bank of Namibia
New vehicle sales were 1287 in the second quarter and increased to 2133 in the 3rd quarter, but still at a very low level, experienced last in 2003.
The impact of the COVID 19 restrictions is mainly felt by the private sector and they can not increase their debt wilfully. Quarterly credit growth by commercial banks declined substantially in 2020, especially credit growth to business. In the second quarter credit to businesses declined by -3.6% and in the 3rd quarter by -2.2%. The private sector has come to a standstill and banks do not provide credit to businesses anymore, a situation Namibia did not experience before.
Graph 5: Quarterly growth in private sector credit by commercial banks
Source: Bank of Namibia
The reason for the decline in credit growth in the last six months is the rise in non-performing loans.
Graph 6: Percentage change in the NPL ratio of commercial banks
Source: Bank of Namibia
A ‘red light’ or risk threshold by the international standards (Bank of International Settlement) is an NPL ratio of 5%. In the 3rd quarter the ratio was 6.5%, 1.5% above the risk norm.
The economy needs urgently liquidity, but the fiscal space is limited and the commercial banks are reluctant to provide funding for businesses. The only option left is to pay all outstanding VAT claims as soon as possible to avoid a further collapse of the economy.
I wish all readers a Happy New Year!
Compiled by: Rainer Ritter
03 January 2021