MPC leaves repo rate unchanged
As expected, the Bank of Namibia this week left the repo rate unchanged at 6% in an effort to spur growth in the local economy threatened by uncertainties in the Euro zone area and weaker demand in advanced economies.
Announcing the central bank’s monetary policy stance for the next two months, Governor Ipumbu Shiimi said the medium-term growth trajectory is clouded by downside risks. He singled out the uncertainties regarding developments in the Euro area, Namibia’s biggest trading partner, as “creating room for concern.”
“The key concern at the moment is the spill-over effects of sluggishness in the global economy particularly continued weaknesses in the Euro zone,” Shiimi said.
But despite the challenges that remain going forward, year-to-date, the overall performance of the real sector has been positive with mining, especially non-diamond mining, registering positive growth Shiimi added. “Construction activities have been robust as the value of buildings completed has increased over the past three months .The tertiary sector also saw improvements in wholesale & retail trade, transport, communications as well as in tourism,” he said.
However, during the period under review, diamond output fell owing to poor ore grade and the closure of diamond mines because of mineral depletion. The agriculture sector also struggled while the manufacturing sector was somewhat weak. Exports of main items fell, partially owing to low prices as well as inventory build-up. The stock of foreign exchange reserves fell by 10.3% month-on-month to N$13.4 billion at the end of February.
Despite the mixed fortunes in the local economy, the central bank maintains a positive outlook for the year and expects Gross Domestic Product growth above 4% from an estimated 3.8% last year.