Namibia’s current account deficit worsened to N$3.1 billion in the second quarter of 2019 compared to a deficit of N$1.3 billion in the second quarter of 2018.
According to the Bank of Namibia’s second-quarter report released Monday, the main drivers of the widening current account deficit were the substantial deterioration in the merchandise trade deficit as a result of a growing import bill, coupled with increased net outflows on the services account.
The central bank said the stock of foreign reserves increased, supported by higher SACU receipts coupled with lower foreign Government payments.
“This resulted in an import cover of 4.5 months at the end of the second quarter of 2019,” the statement said, adding that Namibia’s International Investment Position recorded a net liability of N$2.7 billion at the end of the second quarter of 2019, lower than the position of N$10.7 billion in the corresponding period of 2018.
The Namibia Dollar, the central further said, depreciated against all major trading currencies due to the downside risks that emanated from the trade tensions between the US and China coupled with South Africa’s weak economic growth.
Activity in the domestic economy slowed during the second quarter of 2019, while inflation rose over the same period, the bank said.
“The weak performance in the domestic economy was reflected in the mining sector, due to a decline in the production of both diamonds and uranium.
“Similarly, slower activity has been observed in the wholesale and retail trade and tourism sectors. Activity in the transport and communication sector also slowed as reflected in decreased value addition in the communication subsector,” added the bank.
According to the bank, the construction sector recorded weak activity as a result of reduced private sector construction works. In addition, available livestock (one of the indicators for developments in the agriculture sector) has been reduced due to high drought-induced sales leading to limited restocking activity.
“However, manufacturing activity increased mainly supported by the rise in the production of blister copper and refined zinc. Moreover, Namibia’s inflation somewhat accelerated, reflected in a rise in inflation for food and non-alcoholic beverages, as well as, transport during the period under review,” the bank also said.
The Central Government’s total debt as a percentage of GDP, it further stated, stood at 43.6 per cent at the end of the first quarter of the fiscal year FY2019/20, representing a yearly increase of 3.2 percentage points.
The bank added that on the contrary, total loan guarantees as a ratio of GDP decreased during the period under review and remained within the set ceiling.