Namibia’s central bank left its benchmark repo rate at 6.75 percent and said it still expects the domestic economy to perform “slightly better in 2018 compared to 2017” despite slow activity in the first quarter.
The Bank of Namibia (BON), which has kept its rate steady since cutting it in August 2017, said slow activity in the first quarter was reflected in the wholesale and retail trade, and fishing. But mining, agriculture, transport and communications had performed positively.
Data for Namibia’s first quarter growth have yet to be released but in the fourth quarter of last year Gross Domestic Product shrank by an annual 1.0 percent, the same as in the third quarter.
After shrinking in 2017, Namibia’s economy is expected to rebound this year as mining production ramps up, construction stabilizes and manufacturing recovers, the International Monetary Fund said in February.
In March the BON forecast growth this year of 1.4 percent and 2.1 percent in 2019, up from an estimated contraction of 0.6 percent in 2017. The IMF forecast 1.2 percent growth this year and 3.3 percent in 2019.
Namibia’s inflation rate rose slightly to 3.6 percent in April from 3.5 percent in March and the central bank said it expects inflation to average around 4 percent this year.
Demand for credit eased in the first four months of the year, with annual growth of 5.7 percent, down from 7.8 percent in the same 2017 period, due to reduced demand for credit by both the household and corporate sectors, especially in the form of mortgage, overdraft and installment credit, the bank said.
As of May 31, the stock of international reserves were down N$2.6 billion on a monthly basis to N$28.1 billion, enough to cover 4.7 months of imports.
“Although reserves remain sufficient to sustain the currency peg between the Namibia Dollar and the South African Rand, it is relatively low compared to Namibia’s peers in the region,” BON added.
Namibia holds rate, sees slightly stronger 2018 growth