Foreign reserves dip for second consecutive month
Foreign reserves continued with their downward trend in June, decreasing further to N$33.4 billion at the end of June after falling to N$34.1 billion in May from the N$34.2 billion in April.
This is according to statistics from the Bank of Namibia, who attributed the decline in foreign reserves to net capital outflows of foreign currency through commercial banks, coupled with net government payments during June.
However, Eloise du Plessis, Head of Research at PSG Konsult noted inflows from multilateral loans will strengthen foreign reserve stocks this year.
“The dip in Forex reserves and the moderation in monetary and credit aggregates growth are in line with our forecast that real GDP will contract by 0.8% in 2019 (compared to a contraction of 0.1% in 2018), and that reserves will reach $2.233bn by the end of the year (compared to $2.145 billion at end-2017),” du Plessis said.
Looking ahead, Du Plessis is of the view that transfers from SACU will be under pressure in the short to medium term due to the lackluster performance of the South African economy, while export growth is expected to moderate this year due to the global economic slowdown and lower diamond production.