Namibia's central bank maintained its benchmark repo rate at 7.0 percent, a decision the bank said was "necessary to continue supporting the country's economic growth, particularly in light of slow and fragile recovery in the economies of Namibia's trading partners."
The Bank of Namibia, which has raised its rate twice this year by a total of 50 basis points, said the country's economy had slowed in the first half of 2016 from the same 2015 period and inflation had continued to rise but remained within "acceptable levels."
Namibia's Gross Domestic Product grew by an annual rate of 3.5 percent in the first quarter of this year, down from 7.3 percent in the first quarter of last year but up from 2.9 percent in the fourth quarter of 2015.
The central bank said the mining sector had expanded slowly, particularly in the production of diamonds and zinc concentrate, while reduced activity in manufacturing, transport, construction and agriculture also contributed to the weaker performance.
On the upside, wholesale, retail and communication sectors were relatively strong.
"Going forward, growth is expected to be positive, however, risks remain, which include low commodity prices, volatile exchange rate, the prevailing drought conditions and slow recovery in the economies of Namibia's trading partners," the central bank said.
Namibia's inflation rate rose slightly to 7.0 percent in July from 6.7 percent in June and "going forward, annual inflation is projected to increase, but remain within acceptable levels for the remainder of the year," the bank said.
Namibia's stock of international reserves declined to 19.2 billion Namibian dollars as of Aug. 12 from N$22.1 billion on June 13 and 26.6 billion on April 11.
This stock was the equivalent of 2.4 months of import cover and "sufficient to meet foreign obligations of the country," the bank said.
Growth in Private Sector Credit Extension (PSCE) also continued to decline due to lower demand from households and corporates. Annual average growth in the first six months of this year was 12.4 percent, down from 15.6 percent in the first half of 2015.