Mining continues to fuel growth
Growth in primary industry was boosted by rising mineral production for diamonds, gold and zinc concentrate, while uranium production continued weakening. Likewise, the secondary industry growth was boosted by investments in the construction of both public and private sectors. The tertiary sector also improved, due to higher real turnover for wholesale and retail trade, while activities in the transport sector slowed as a result of low cargo volumes handled by rail and road. Activities in the manufacturing sector performed poorly, due to sluggish mineral processing the Bank of Namibia said in its latest quarterly report.
Namibia’s average headline inflation rose during the quarter under review. The average headline annual inflation rose as a result of increased inflation for food and non-alcoholic beverages, transport and housing. The inflation rate recorded for August 2014 was, however, slightly lower by 0.2% from the rate of 5.6% during the previous month, following a decline in food inflation the Bank of Namibia reported.
Broad money supply expanded on a quarterly basis, while the Monetary Policy Committee increased the Repo rate in the latter part of the second quarter of 2014. The growth in M2 emanated from an increase in net foreign assets of the depository corporations. Likewise, growth in private sector credit extension rose in the second quarter, on account of the corporate sector borrowing.
The Central Government outstanding nominal debt stock and loan guarantees rose on an annual basis at the end of the first quarter of 2014/2015, but remained sustainable. Consequently, the ratio of debt and guarantees remained sustainable, but remained below the government’s ceiling and pose no immediate risk to the government’s fiscal position according to the Bank of Namibia. The overall balance of payments of the Balance of Payments recorded a marked surplus, despite the widening trade deficit, while the net asses position in International Investment Position reduced. The higher surplus of N$1.4 billion in the external balance during the second quarter of 2014 was due to the increased net inflows in the capital and financial account. The current account, however posted a deteriorated deficit, due to a widening deficit in the trade balance that resulted from a high import bill.
On a quarterly basis, the Namibian Dollar appreciated against all major trading currencies during the second quarter of 2014, while [the Namibian Dollar] depreciated, year-on-year. Commodity prices, especially for copper, gold, and uranium declined and remained a challenge to Namibia’s export earnings, while the rising crude prices might increase the country’s import bill going forward, the Bank of Namibia said.