Economic growth to be positive but low
Although economic performance started off on a bad note this year, central bank remains optimist that the year will experience a positive growth compared to last year albeit it will be low.
Speaking to the media at the latest monetary policy statement release yesterday, Governor Iipumbu Shiimi pointed out that the sluggish growth at home is a reflection of a struggling global economy.
He thus rallied businesses to borrow more credit for investments and not consumption but remains concerned about the negative shocks from South Africa which has suffered a contraction while the Rand has been failing to make good of its December gains.
“We want the households to continue saving and not taking too much debt. In fact, we want to shift from a consumption drive to an investment drive. We have seen government reorienting expenditure so that they can create more space to put more money in investments,” said Shiimi.
Credit extended to businesses and individuals lowered in the first four months of this year with average growth standing at 5.7% relative to 7.8% in the same period last year.
This is on account of reduced demand by both households and business.
Meanwhile, the monetary policy committee has kept the repossession rate unchanged at 6.75% to safeguard foreign reserve levels and the one-on-one link between the Nad and Rand.
By the 31st of May 2018, reserves stood at N$28.1 billion which represents decline of N$2.6 billion on a monthly basis but is projected to cover 4.7 months of imports of goods and services.
This is an upward shift from the recent 3.8 months of import cover, a good development on account of imports falling.
“Its something that we are celebrating but also we need to keep in mind that the import bill is slowing down because we are importing less. When we start to import more, again we consume more.”
“It’s something that we are warning again, (that) the import bill is going to increase, also if we start to invest but that’s not something that we will complain about,” he said.
The slow activity in the economy was largely shown in the wholesale and retail trade and fishing sectors while mining, agriculture, transport and communication sectors performed well.