Windhoek-The growth in M2, or money readily available for spending in the domestic market, moderated on a year-on-year basis but rose quarter-on-quarter, in the period up to the second quarter.
This is according to a Bank of Namibia (BoN) review of the second quarter of 2017. M2 is defined as a measure of the domestic money supply that includes M1 (currency in circulation) plus savings and time deposits, overnight repurchase agreements, and personal balances in money market accounts. So, basically, M2 includes money that can be used for spending (M1) plus items that can be quickly converted to M1.
“The major contributors to the slower growth in M2 at the end of the period under review were the subdued growth in net foreign assets of the depository corporations and the slowdown in the growth of private sector credit extension (PSCE). The slower growth in PSCE is reflected in most credit categories for both individual and corporate sectors during the review period and was consistent with the sluggish economy and, most recently, lower inflation,” said Bank of Namibia Governor, Iipumbu Shiimi.
Economic analysts believe the continued slowdown in credit to individuals reflects prevailing pressure on the consumer economy.
BoN’s latest Money and Banking Statistics reflect a monthly increase of 0.7 percent month-on-month and a continued slowdown (-5.9 percent y/y) in total PSCE to N$88.5 billion. The three-month moving average fell to a fresh series low of 6.7 percent from 7.6 percent in July. The pace of growth in individual credit continued to slow +6.4 percent year-on-year from +8.3 percent year-on-year to reach N$51.4 billion. This growth was was -0.5 percent lower month-on-month, while the N$36.6 billion credit extended to businesses countered the slowdown accelerating to +6 percent year-on-year and +2.1 percent month-on-month.
Commercial banks’ overall liquidity position increased to N$3.9 billion at end August from N$3 billion at the end of June, as foreign reserves eased to N$30.6 billion from N$33.7billion. BoN attributes the decline in foreign reserves to net commercial purchases of foreign currency, government payments and exchange rate valuation. New Era Reporter
2017-10-04 11:23:18 | 2 years ago