Business Reporter
ECONOMISTS from Simonis Storm Securities have said that the recent reintroduction of tariffs on Chinese goods by the US, alongside a 25% duty on Mexican and Canadian imports, is expected to increase global manufacturing and transport costs.
This, Simonis Storm Securities said, will filter through to South Africa and Namibia via higher imported inflation on consumer goods, fuel, and industrial inputs.
“Inflation, a key driver of real economic activity, rose to 3.4% in December from 3.0% in November, mainly due to higher food, transport, and non-alcoholic beverage prices. For 2025, inflation is projected to average 4.0%, supported by stable external conditions and moderated domestic demand. However, risks to this forecast are mounting due to rising import costs, currency pressures, and global trade disruptions. As a result, Namibia could face second-round inflationary effects, particularly if a weaker rand leads to additional price pressures,” said Almandro Jansen, Junior Economist at Simonis Storm Securities.
He added that this dynamic may limit the Bank of Namibia’s ability to cut rates as aggressively as initially expected, as inflation risks must be carefully managed alongside monetary easing.
Further to this, Jansen said that Private Sector Credit Extension (PSCE) growth—the rate at which businesses and households borrow money—accelerated to 4.0% year-on-year in December 2024, the highest level since early 2023.
“This increase reflects a notable rise in corporate credit demand, while household credit remained largely stagnant. December’s growth marks a significant acceleration from 3.3% year-on-year in November, underscoring improving risk appetite among corporates. Corporate credit expanded 5.4% year-on-year in December, up from 3.6% in November, reflecting stronger borrowing demand from businesses. This uptick was particularly evident in the mining and fishing sectors, where firms increasingly utilized debt for expansion and capital investment. The improved cost of financing—amid a more accommodative credit environment—likely contributed to this stronger corporate credit growth,” Jansen said.
In contrast, household credit growth remained at 3.1% year-on-year, unchanged from November.
“This stagnation reflects a subdued consumer appetite for borrowing, influenced by higher real interest rates, weaker income growth, and tighter lending standards. The widening gap between business and household credit growth highlights an asymmetric credit recovery, where businesses benefit more from improved financial conditions compared to consumers,” Jansen said.
As of December 2024, Namibia’s total corporate debt stock stood at N$48.4 billion, marking a N$566.9 million increase from November. On a year-on-year basis, corporate credit grew by 5.4%, driven by investment in infrastructure, technology, and capacity expansion. For the full year of 2024, total corporate debt amounted to N$622.9 billion, with an average annual corporate credit growth rate of 2.35%. This steady expansion reinforces confidence in Namibia’s investment climate.
As of December 2024, Namibia’s household debt stock rose slightly to N$68.7 billion, up from N$68.4 billion in November, reflecting an annual increase of N$243.3 million.
Despite this growth, Jansen explained that household credit expansion remains relatively subdued, suggesting cautious borrowing behavior in response to economic conditions. Over the full year, total household debt stood at N$811.2 billion, with an average annual growth rate of 2.56%.
