BoN satisfied with economic progress

THE central bank has expressed satisfaction with the state of the economy despite the high inflationary pressures currently being experienced.

For the first time, Namibia currently has import cover of three and a half months, more than the international stipulation of three months. This achievement means that Namibia has substantial foreign currency reserves to cater for imports for over three months.In its quarterly bulletin (April – June), the Bank of Namibia said although the fiscal position remained strong, and the country’s external account was healthy, there were still threats to this stable environment.These economic conditions are in line with the global economy which progressed at a ‘satisfactory pace’ during the second quarter.Growth was seen in strong economies like US, UK and China, but economic growth in South Africa, the euro zone and Japan slowed.”Overall, the state of Namibian economy remained generally satisfactory during the second quarter of 2007.Nevertheless, there are risks to the outlook that need to be monitored very closely.”These include an upside risk to the inflation outlook emanating from high and volatile oil prices and uncertainties related to food production,” said BoN Governor Tom Alweendo in a prepared speech.Despite the central bank putting in place a tighter monetary policy, inflation has continued with its upward movement.Inflation increased to a quarterly average of 7,0 per cent between April and June.This, according to BoN, is 0,9 and 2,6 percentage points higher than that of the first quarter on the year and the corresponding quarter of 2006, respectively.BoN is wary of rising inflation and believes it is likely to rise more until year end.”The main forces behind the persistent inflationary pressure were reflected in the inflation of the categories of food, non-alcoholic beverages and transport.Although inflationary pressure moderated somewhat to 6,8 per cent in August, it might rise again in the remaining half of the year.”Individual economic sectors saw mixed performances – some negative, some positive – during the quarter under review.The key industries of mining and quarrying and agriculture saw a decline, while growth was noted in the construction, transport and communication sectors.The central bank also released its Financial Stability Report yesterday, which reviews the performance of the financial sector.The report revealed that during the first six months of the year, local banks continued to realise profits, mainly on the back of better lending margins and fee income, which allowed the commercial banks to maintain their capital at healthy levels.econ 6This achievement means that Namibia has substantial foreign currency reserves to cater for imports for over three months.In its quarterly bulletin (April – June), the Bank of Namibia said although the fiscal position remained strong, and the country’s external account was healthy, there were still threats to this stable environment.These economic conditions are in line with the global economy which progressed at a ‘satisfactory pace’ during the second quarter.Growth was seen in strong economies like US, UK and China, but economic growth in South Africa, the euro zone and Japan slowed.”Overall, the state of Namibian economy remained generally satisfactory during the second quarter of 2007.Nevertheless, there are risks to the outlook that need to be monitored very closely.”These include an upside risk to the inflation outlook emanating from high and volatile oil prices and uncertainties related to food production,” said BoN Governor Tom Alweendo in a prepared speech.Despite the central bank putting in place a tighter monetary policy, inflation has continued with its upward movement.Inflation increased to a quarterly average of 7,0 per cent between April and June.This, according to BoN, is 0,9 and 2,6 percentage points higher than that of the first quarter on the year and the corresponding quarter of 2006, respectively.BoN is wary of rising inflation and believes it is likely to rise more until year end.”The main forces behind the persistent inflationary pressure were reflected in the inflation of the categories of food, non-alcoholic beverages and transport.Although inflationary pressure moderated somewhat to 6,8 per cent in August, it might rise again in the remaining half of the year.”Individual economic sectors saw mixed performances – some negative, some positive – during the quarter under review.The key industries of mining and quarrying and agriculture saw a decline, while growth was noted in the construction, transport and communication sectors.The central bank also released its Financial Stability Report yesterday, which reviews the performance of the financial sector.The report revealed that during the first six months of the year, local banks continued to realise profits, mainly on the back of better lending margins and fee income, which allowed the commercial banks to maintain their capital at healthy levels.econ 6