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Worst inflation recorded since 2009

Sat, 18 February 2017 00:15
by Rodney Pienaar
News Flash

The Bank of Namibia on Wednesday said Namibia suffered the worst recorded inflation since 2009, as the annual inflation rate increased to 8.2 % in January this year from the 7.3 % of last December.

The Namibia Statistics Agency (NSA) also revealed, that January recorded the highest monthly inflate rate in the last 14 years. According to the Namibia Consumer Price Index released by NSA, on a monthly basis the price levels increased to 3.2 percent from 0.2 percent recorded in December.

The increase in inflation rate has mainly been driven by the rise in the inflation rates of major categories such as housing, water, electricity, fuels as well as transport and food. According to the central bank governor Iipumbu Shiimi, the increase in the inflation rate has also been driven by a decline in production of majorcontributing sectors to the economy.

“The mining sector especially the diamond sector declined in production out put. The construction sector’s negative slow growth and the agricultural sector that is contracting due to drought have contributed to the inflation rate that we experience now since October 2009,” Shiimi said. He further noted that sectors such as the Tourism and Retail sectors are currently contributing massively to the growth of the Namibian economy. The Monetary Policy Committee (MPC) of BoN reported that the repo rate remains unchanged at 7 % and growth in the global economy is estimated to have slowed in 2016, compared to 2015.

The domestic economy is estimated to have slowed in 2016 compared to 2015 while the overall rate of inflation increased. Growth in private sector credit slowed during 2016 compared to the previous year. The average annual growth in private sector stood at 11.4 % in 2106 lower than the 15 % in the previous year.

This is due to low credit extended both in the corporate and household sectors. Total credit extended to businesses on average slowed to 12.1 % during 2016 compared to 18.9 % in 2015. Lower growth was registered across most credit categories, with the exception of other loans and advances which rose faster from 7.1 % in 2015 to 10.8 % during the review period. Similarly, the annual average growth rate in credit extended to individuals slowed to 10.9 % in 2016 for 12.8% during 2015.

The slower growth in credit to individuals was also reflected in overdraft, mortgage and instalment credit, while other loans and advances grew faster in 2106. Latest figures indicate a down trend in growth, with annual growth of total private sector credit standing at 8.9 % and for individuals at 9.3 % in December 2016.

World Banks January 2017 Global Economic Prospects states that “Global economic growth is forecast to accelerate moderately to 2.7 % in 2017 after a post- crisis low last year”. Growth in advanced economies is expected to edge up to 1.8 % in 2017 while growth in emerging market and developing economies as a whole should pick up to 1,8 %. Growth in emerging markets and developing economies as a whole should pick up to 4.2 % this year from 3.4 % in 2016 on the back of modest commodity price increases. Growth in South Africa oil exporters is expected to weaken while growth in economies that are not natural resource intensive are anticipated to remain robust.

The world economy is estimated to have registered growth of 3.1 % in 2016 slightly lower than the 3.2 % in 2015. Growth for advanced economies is estimated to have slowed to 1.6 % compared to 2.1 % in the previous year. Meanwhile, global growth is expected to pick up to 3.4 % in 2017 on account of positive developments in both advanced economies and Emerging Market Development Economies (EMDEs).