Domestic Economy projected to remain in 2019
THE Monetary Policy Committee (MPC) of the Bank of Namibia decided to keep the repo rate unchanged at 6.50%.
The MPC took this decision in order to continue supporting domestic economic activity and to maintain the one-to-one link between the Namibia Dollar and the South African Rand.
Iipumbu Shiimi, central bank governor, stated that the global economic growth slowed during the third quarter of 2019 according to preliminary data, while Inflation rates in most monitored countries remained low, resulting in generally accommodative monetary policy stances.
Shiimi stated that monetary policy stances of central banks in the Advanced Economies and Emerging Market and Developing Economies remained generally accommodative since the previous MPC meeting in October 2019.
The central banks of the US, Brazil, Russia and India cut their policy rates while those of South Africa, Angola and China maintained their policy stances.
Shiimi further elaborated that the domestic economic activity slowed during the first 10 months of 2019.
He explained that domestic economic activity continued to slow during the first 10 months of 2019, compared to the corresponding period of 2018 and that the slowdown was mainly reflected in sectors such as mining, manufacturing, construction, wholesale and retail trade and agriculture.
“Going forward, the domestic economy is projected to remain weak in 2019,” Shiimi said.
The inflation rate declined further to an average of 4.0% during the first 10 months of 2019.
Shiimi explained that the moderation was mainly due to a decline in housing and transport inflation. In October 2019, the inflation rate also declined further to 3.0% down from 3.3 % in September 2019 and its recent peak of 5.6 %, observed in November 2018. Overall inflation is projected to average 3.8% in 2019.
Annual average growth in Private Sector Credit Extension (PSCE) increased marginally to 6.8% during the first 10 months of 2019, compared to 6.2% in the corresponding period of 2018. The increase in PSCE growth was mainly due to a higher uptake of credit by businesses in the retail, real estate, financial and other services sectors.
In contrast, growth in credit extended to individuals slowed during the first 10 months of 2019, compared to the same period in 2018. Since the previous MPC meeting, the annual growth in PSCE remained unchanged at 6.4 % in October 2019, the same rate as reported in the previous MPC statement.
“As at 31 October 2019, the stock of international reserves remained almost unchanged at N$32.5 billion, compared to N$32.3 billion reported in the previous MPC statement. This amount of international reserves is estimated to cover 4.3 months of imports of goods and services. At this level, the reserves are sufficient to protect the peg of the Namibia Dollar to the South African Rand and meet the country’s international financial obligations,” Shiimi concluded.