Economic performance satisfactory says central bank
The performance of the Namibian economy was satisfactory during the first quarter of 2014. Available indicators show that the secondary and tertiary industries performed relatively well, while the primary industry showed some weaknesses said Bank of Namibia Deputy Governor Ebson Uanguta.
The favourable performance in the secondary industry was supported by increased public investment in the construction sector, coupled with a rise in planned private property developments. Within the manufacturing sector, the production of blister copper and soft drinks increased relative to the first quarter of 2013, and contributed significantly to the overall growth in the secondary industry.
In addition, real turnover for wholesale and retail trade grew robustly, thus supporting growth of the tertiary industry. In contrast, the transport sector’s performance weakened, due to low cargo volumes handled during the review period. The primary industry also posted sluggish growth during the first quarter of 2014, compared to the same quarter of 2013, due to low mineral production, particularly for uranium and zinc concentrate said Uanguta.
In the first quarter of 2014, growth in the credit aggregates continued to be robust, while inflation remained within single digits. Credit aggregates grew strongly, year-on-year, in the environment of an accommodative monetary policy stance. Vehicle imports, partly financed by instalment credit also increased significantly.
Namibia’s headline inflation rose during the first quarter of 2014, due to increased inflation for food and non-alcoholic beverages, while inflation for transport, housing and alcoholic beverages and tobacco slowed. The inflation rate for May was 6.1 percent and remained well within single digits.
The Government’s fiscal position remained strong at the end of 2013/14, although a small budget deficit was recorded, compared to a balanced budget registered during the financial year 2012/13. The Government’s total debt as a ratio to GDP rose slightly to 24.5 percent but remained significantly below the government’s debt ceiling of 35.0 percent of GDP. For the first quarter of 2014, Namibia’s external sector remained under pressure due to the rapid increase in import payments, which was not in line with the increase in exports. On a yearly and quarterly basis, the overall balance of payments recorded a deficit, mainly as a result of the widening current account deficit and a decreased surplus of the capital and financial account during the first quarter of 2014.
On a yearly basis, the International Investment Position (IIP) recorded a rise in the net surplus position, mainly due to the increased Namibian private sector claims on non-residents. Regarding the exchange rate, the Namibia Dollar continued to depreciate against currencies of its major trading partners during the first quarter of 2014, thus supporting the country’s external competitiveness Uanguta said.
The decreasing international commodity prices remain a major risk to the domestic outlook.
The IMF projected an increased global growth for 2014 with fragility and uncertainty continuing to characterize the outlook. The key risks to the outlook include both the high debt levels and unemployment rates in developed economies, coupled with decreased commodity prices. The latter might negatively affect Namibia’s exports, going forward he concluded.