What is the
post-lockdown path?
W
e are living in unprecedented times. Every article in this magazine should start with this line. To many of us “normal” freedoms such as a coffee at Slowtown are but a distant memory, a relic of a time when we carelessly invaded each other’s personal space by shaking hands and exchanging pleasantries. Okay, it’s probably not quite that bad, but freedom was heavily cut back in an effort to “flatten the curve” and prevent the COVID-19 pandemic from overwhelming the healthcare system. The COVID-19 virus is highly transmissible and has proven to be deadly. While it is not as fatal as SARS or Ebola, it is in the ease of transmission and asymptomatic early stage carriers that the real danger lies. It means that a lot more of us will eventually get COVID-19, with some experts suggesting that it could be with us permanently, moving across the globe in the same way as the common flu already does. Scientists are still figuring out how contagious and lethal the virus is and these unknowns have resulted in governments implementing what amounts to a global lockdown on a scale never seen before in our era of globalisation. Attempts to mitigate the spread of the virus started with travel restrictions, then limitations to the transportation of goods and finally lockdowns. The intention is to minimise human interaction and thus the transmission of the virus. The severity of these lockdowns and restrictions of movement and trade differ from country to country. Sweden’s approach has
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been quite relaxed, with limited social distancing measures and most things still functioning on a rather normal level, while South Africa imposed relatively harsh lockdowns and severely restricted trade and services. The direct consequence of attempts to mitigate the spread of the virus is an economic crisis the magnitude of which was last seen during the great depression of the early 1930s. In its April World Economic Outlook the IMF projected a global contraction of 3%, far worse than the 0.1% contraction recorded in 2009 as a result of the Global Financial Crisis. A contraction of 3% translates into a global output loss of around US$ 9 trillion, an amount equivalent to a whole years’ worth of activity from the world’s 152 smallest economies (out of 186 countries). And if the latest economic data from the US and Europe are anything to go by, the global contraction may end up being even larger. So where does this leave Namibia? For some years now IJG has warned that the Namibian government’s ability to deal with external shocks was limited due to pro-cyclical policy between 2010 and 2015 leading to large budget deficits and ballooning government debt. Poor economic growth and a depressed business climate over the last four years further eroded fiscal capacity. Thus, the Namibian economic climate and government toolbox were not ideally positioned for any external shocks, let alone a shock of the magnitude which we are facing now. Indeed, IJG’s forecasts now point to a contraction in real GDP of between 5.5% and 11.5% in 2020, depending on the severity of the lockdowns going forward. This constitutes the largest step backward in our 40 year dataset.
