• January 24th, 2020

Domestic economy remained weak during first quarter – BoN

WINDHOEK – The Bank of Namibia’s (BoN) latest Quarterly Bulletin has confirmed that activity in the domestic economy slowed during the first quarter of 2019, compared to the corresponding quarter in the previous year. 

The bulletin for the first quarter of 2019 indicates that the decline was mainly reflected in the weaker performance in the mining sector and the reduction in marketing activity in the agriculture sector, especially cattle marketed. Similarly, slower activity was observed in the wholesale and retail trade and tourism sectors. The construction sector also recorded weak activity during the first quarter of 2019, as reflected in declines in both public and private construction. Improvements were, however, registered in the manufacturing sector. 

Namibia’s inflation accelerated during the first quarter of 2019 compared to the same period in 2018, mainly driven by food and transport inflation. 

With regards to developments in the monetary and credit aggregates, the bulletin growth in broad money supply (M2) slowed while growth in credit extended to the private sector rose. During the period under review, growth in M2 was subdued in line with the weak growth in the domestic economy. This was mainly driven by the slower pace in the growth in total claims in the private sector. 

Growth in credit extended to the private sector, although remaining low, rose slightly due to an improved appetite for credit by businesses, while growth in credit extended to households slowed during the period under review. 

BoN’s Monetary Policy Committee kept the repo rate unchanged at 6.75 percent during the period under review. This decision was taken in order to maintain the one-to-one link between the Namibia Dollar and South African Rand while supporting domestic economic growth.  

In a statement issued on Friday, BoN spokesperson, Kazembire Zemburuka noted that on the fiscal front, government’s budget deficit narrowed during the 2018/19 fiscal year (FY) compared to the preceding fiscal year, while government’s debt stock continued to rise. The central government’s budget deficit as a percentage of GDP for FY2018/19 narrowed to 4.4 percent and is estimated to improve further to 4.0 percent during FY2019/20. Total debt as a percentage of GDP stood at 44.9 percent at the end of FY2018/19, representing yearly and quarterly increases of 4.6 percentage points and 0.5 percentage point, respectively, and continued to trend above the debt ceiling. Total loan guarantees as a ratio of GDP decreased during the period under review and remained within the set ceiling. 

Namibia recorded a current account surplus during the first quarter of 2019. Namibia’s current account recorded a surplus of N$1.1 billion during the first quarter of 2019, from a deficit of N$1.0 billion in the corresponding quarter of the previous year. The surplus was mainly as a result of the significant narrowing in the merchandise trade deficit. This was largely driven by the substantial decline in the values of merchandise imports and, to a lesser extent, the increase in export earnings. 

The stock of foreign reserves held by BoN increased due to the impact of the second tranche of the African Development Bank loan, coupled with exchange rate revaluations. This resulted in an import cover of 5.4 months at the end of the first quarter of 2019. Namibia’s international investment position recorded a net liability of N$11.8 billion at the end of the first quarter of 2019, a lower position compared to a year earlier.

The Namibia Dollar depreciated against all major trading currencies due to tighter global financial conditions, financial market volatility, trade wars and Brexit negotiations, as well as sustained uncertainty regarding land expropriation in South Africa. 

Staff Reporter
2019-07-01 10:08:44 | 6 months ago

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