Namibia’s merchandise trade deficit surged to N$25.8 billion in the first eight months of 2024, compared to N$21.2 billion during the same period in 2023, latest data shows.
According to Bank of Namibia Governor Johannes !Gawaxab, the widening gap was driven by increased imports of machinery and consumer goods, despite a slight rise in export receipts.
Inflation, on the other hand, continued to decline, averaging 4.6% year-to-date, down from 6.0% in 2023, with food and transport costs contributing to the decrease.
“The domestic disinflation cycle continued year-to-date. Inflation averaged 4.6% in the first nine months of 2024, compared to 6.0% recorded during the same period in 2023. The decrease in inflation was essentially driven by lower average food inflation, with communication and, most recently, transport inflation also playing a role,” the Governor said at the monetary policy announcement on Wednesday.
To continue supporting the domestic economy while simultaneously safeguarding the peg between the Namibia Dollar and the South African Rand, the Monetary Policy Committee (MPC) unanimously decided to cut the repo rate by 25 basis points to 7.25%.
Since the previous MPC meeting, the Governor noted inflation has risen to the downside, falling from 4.6% in July 2024 to 3.4% in September 2024, the lowest since August 2021, mainly due to the deceleration in transport inflation.
“Going forward, the medium-term inflation forecast has been revised downward to 4.3% in 2024 and 4.0% in 2025, compared to 4.7% and 4.4%, respectively, at the previous MPC meeting,” he said.
The revised forecast is attributed to a more favourable outlook for international crude oil prices and a stronger exchange rate.
Meanwhile, since the last MPC meeting, annual growth in PSCE exhibited a modest improvement to 2.1% at the end of August 2024 from 1.8% at the end of June 2024.
However, the average PSCE growth for the first eight months of 2024 was lower at 2.0%, compared to 2.7% during the corresponding period in 2023 driven by weak demand.
“Nevertheless, the recent tax relief, moderately lower interest rates, and government expenditure could potentially stimulate credit demand going forward,” !Gawaxab added.
This comes as prices of key commodities have risen since the last MPC meeting.
“Gold prices trended higher due to safe-haven demand, while zinc and copper also increased, supported by lower global interest rates and a weaker US Dollar,”!Gawaxab noted.
Food prices increased amid concerns over adverse weather in key export nations. Uranium prices initially dropped in late August but recovered over the following six weeks.
Diamond prices stabilised due to high inventories in India, though weak global demand, especially from the U.S. and China, remains a challenge. Brent crude oil prices also fluctuated, driven by Middle East tensions.
