The Bank of Namibia (BoN) says the country’s economy is expected to slowdown to 3.4% in 2024, citing weakened primary and secondary sectors partly attributed to uncertain weather patterns.
Apex bank Governor, Johannes !Gawaxab said going forward, GDP growth is projected to decelerate from a revised 6.4% in 2022 to 3.9% in 2023 and further down to 3.4% in 2024.
“Domestic economic activity expanded during 2023, as reflected in sectors such as mining, electricity generation, livestock farming, wholesale and retail trade, tourism, communication and transport. Meanwhile, activity in the construction sector remained weak,” he said.
This decision comes as the Monetary Policy Committee (MPC) opted to maintain the repo rate at 7.75% during Wednesday’s monetary policy announcement.
The move aims to uphold the peg between the Namibia Dollar and the South African Rand while also bolstering the domestic economy.
!Gawaxab noted that the preliminary stock of international reserves stood at N$49.7 billion as of 31 January 2024, slightly higher than the N$49.0 billion reported at the previous MPC meeting, partly due to SACU receipts.
“The latest stock of international reserves is estimated to cover 3.7 months of imports, remaining sufficient to support the currency peg between the Namibia Dollar and the South African Rand while meeting the country’s international financial obligations,” he said.
Meanwhile, the bank observed that annual inflation moderated to 5.9% in 2023 from 6.1% in 2022, primarily due to a deceleration in the transport category.
Consequently, inflation slowed from 6.0% in October 2023 to 5.4% in January 2024, compared to the previous MPC meeting.
“Inflationary pressures are expected to continue receding with consumer price inflation projected to average 4.8% in 2024, unchanged compared to the previous forecast,” said !Gawaxab.
Similarly, annual growth in private sector credit extension (PSCE) remained weak despite edging slightly upwards to 1.9 % in December 2023 from 1.8 % in October 2023.
“The slight improvement in PSCE growth was characterised by a higher credit uptake by the corporate sector in the form of instalment sale and leasing finance. On average, growth in PSCE slowed from 3.6% in 2022 to 2.4% in 2023 and is projected to improve marginally to 2.8 % in 2024,” !Gawaxab said.
Meanwhile, Namibia’s merchandise trade deficit narrowed to N$30.3 billion in 2023, 3.7% below the level recorded in 2022, as export earnings rose faster than import payments.
“The rise in export earnings was predominantly observed in the mining sector, particularly gold, uranium, and rough diamonds due to higher export volumes and the depreciation of the Namibia Dollar against major trading currencies,” he said.
