Namibia holds rate to soften impact of slow global growth

    Namibia's central bank held its benchmark repo rate steady at 5.50 percent, saying the current low interest rate should be maintained to mitigate the impact of slow growth in many of the country's trading partners.
    The Bank of Namibia, which cut its rate by 50 basis points in 2012, said economic growth is expected to ease slightly in 2013, in line with key trading partners "although growth of domestic demand may remain strong, while elevated inflation may persist," the bank said in a statement from its governor, Ebson Uangutu.
    Namibia's economy is estimated to have expanded by 4.6 percent in 2012 and is forecast to grow by 4.4 percent in 2013, driven by secondary industries, particularly construction, the bank said. In 2011 the economy grew by 4.8 percent.
    The mining sector, which was estimated to have expanded by 17 percent in 2012, is expected to see moderate growth of 3.8 percent this year.
    Namibia's Gross Domestic Product contracted by 5.4 percent in the third quarter from the second for an annual decline of 1.3 percent, down from the second quarter's annual growth rate of 10.7 percent.
    Namibia's inflation rate rose to 6.6 percent in January, above 2012's average rate of 6.5 percent, and December's 6.34 percent rate.

    The increase in inflation was due to annual increases in administered prices, particularly education and housing, while food inflation remained elevated, the bank said.
    Domestic demand remains strong with private sector credit extension up an annual 17 percent in December, the second highest level seen in almost six years. Credit to businesses grew by 22.2 percent at the end of December while credit for mortgages was up by 13.1 percent, below November's 14.3 percent.
    Namibia's dollar currency depreciated against major currencies in January, December and November, based on its peg to the South African Rand which has declined due to the sale of rand-based assets, including government bonds, the Bank of Namibia said.
    But Namibia's stock of international reserves is sufficient to cover the fixed exchange rate peg with foreign reserves equal to 3.4 months of import cover.

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