Windhoek - Namibia’s domestic economic activity slowed during the first 10 months of 2019 with the inflation rate remaining low ahead of the festive season.
This is according to the country’s central bank, Bank of Namibia, which said that domestic economic activity continued to slow during the first 10 months of 2019, compared to the corresponding period of 2018.
Information provided by BoN governor Iipumbu Shiimi shows that the growth rate of Private Sector Credit Extension (PSCE) was broadly flat over the first 10 months of 2019, but the stock of international reserves continued to be sufficient to support the currency peg.
The slowdown was mainly reflected in sectors such as mining, manufacturing, construction, wholesale and retail trade and agriculture.
Iipumbu said going forward, the domestic economy was projected to remain weak in 2019.
The inflation rate declined further to an average of 4% during the first 10 months of 2019. The moderation was mainly due to a decline in housing and transport inflation. In October 2019, the inflation rate also declined further to 3% down from 3.3% in September 2019 and its recent peak of 5.6%, observed in November 2018. BoN said overall inflation is projected to average 3.8% in 2019.
BoN said annual average growth in PSCE increased marginally to 6.8% during the first 10 months of 2019, compared to 6.2 percent 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 Monetary Policy Committee (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 the 31st of 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,” said Shiimi.
In its August 2019 MPC statement, BoN announced the moderate easing of the loan-to-value ratios applicable to non-primary property loans. The new regulation relating to restrictions on loan-to-value ratios issued in terms of the Banking Institutions Act, 1998, as approved by the Minister of Finance was gazetted on 7 November 2019.
“On the 3rd of December 2019, the Monetary Policy Committee (MPC) of the Bank of Namibia held its bi-monthly meeting and decided to keep the repo rate unchanged at 6.50%. This decision was taken following a review of global, regional and domestic economic and financial developments. The next meeting of the MPC will be held on the 11 February 2020,” said Shiimi.