Namibia repo rates remain unchanged
WINDHOEK – The Bank of Namibia (BoN) decided to keep the Repo rate unchanged at 7 percent in order to maintain the one-on-one link between the Namibian Dollar and the South African Rand, without compromising growth.
BoN’s Governor, Iipumbu Shiimi announced on Wednesday and added that the decision was also taken following a review of the global, regional and domestic economies as well as the financial developments.
According to Shiimi, the domestic economy remained weak during the first four months of 2017 when compared to the same period last year.
“This feeble performance was largely reflected in sectors such as manufacturing, construction as well as wholesale and retail trade,” he added.
He further stressed those activities in the transport and communication sectors also slowed down as observed in the lower cargo volumes for rail and sea transport.
“There are, however, some bright spots in the economy as reflected in the value addition for the communication sector, which increased during the period under review,” he pointed out, saying that activity in the mining sector increased, especially in the production of diamonds, zinc and gold over the same period.
Shiimi was optimistic that the production of uranium and blister copper would improve during the remainder of the year.
Namibia’s inf lation rate decreased from 8.2 percent in January 2017 to 6.7 percent in April 2017, mainly due to lower food inflation.
“Going forward, inflation is forecasted to average around 6.9 percent at the end of 2017,” he said.
Growth in the Private Sector Credit Extension (PSCE) slowed during the first four months of 2017 to 8.6 percent, from 13 percent during the same period in 2016.
Iipumbu said the slow growth was visible in credit advanced to both the corporate and household sectors, especially in the sub-categories of mortgage and instalment credit.
Stock of international reserves is stood at N$24,2 billion, representing an increase on a monthly and annual basis due to local institutional investors who liquidated some of their foreign investments to invest in the domestic economy.
“At this level, the stock of international reserves is estimated to cover 3,7 months of imports of goods and services and thereby remains sufficient to sustain the currency peg between the Namibian Dollar and the South African Rand,” said Iipumbu.
On the global economic front, the economy is projected to grow by 3.5 percent in 2017, from 3.1 percent in 2016, supported by improved growth in both the Advanced Economies (AEs) and the Emerging Markets and Developing Economies (EMDEs).
Some advanced economies slowed in the first quarter of 2017 compared to the previous quarter with the exception of Japan which gained momentum.
Going forward, the AEs are projected to grow by 2 percent in 2017, compared to 1.6 percent in 2016, mainly driven by the US.
Economic activity in the EMDEs is expected to improve during the first quarter of 2017 except for South Africa that contracted.