Bank of Namibia (BoN) Governor, Johannes !Gawaxab, on Wednesday announced a repo rate increase of 50 basis points from 7.25 per cent to 7.75 per cent with immediate effect.
Speaking at a media conference held in the capital on Wednesday, !Gawaxab said the decision was taken following a comprehensive review of global, regional and domestic economic developments.
He explained that domestic economic activities improved during the first four months of 2023, however, inflation remained elevated and growth in private sector credit extension remained weak.
The governor said the domestic improvement was mainly observed in sectors such as mining, manufacturing, wholesale and retail trade, communication and tourism, adding that the construction sector remained subdued due to the continued contraction in private sector works.
“Going forward, real Gross Domestic Product (GDP) growth is projected to slow down to 3.0 per cent in 2023 from 4.6 per cent registered in 2022, on account of slower growth in the primary and secondary industries,” he indicated.
!Gawaxab noted that Namibia’s average inflation rate rose to 6.8 per cent during the first five months of 2023, compared to 4.9 per cent during the corresponding period in 2022, noting the rise in the average consumer prices was predominantly driven by food and housing price inflation.
He further indicated that Namibia’s trade deficit narrowed by 19.9 per cent to N.dollars 9.4 billion during the first four months of 2023, compared to the same period in 2022, noting the improved trade balance was on account of higher export earnings from uranium, diamonds, gold and fish, reflecting a rise in volumes exported, as well as the depreciation of the Namibia Dollar/Rand exchange rate.
“Key downside risks to the global economic outlook include the possible escalation of geopolitical tensions, tighter financial conditions and the persistent inflation. Other key risks are the increased uncertainty from the recent financial sector turmoil and growing geopolitical fragmentation,” he said.
Source: Namibia Press Agency