Bank of Namibia (BoN) Governor Johannes !Gawaxab on Wednesday said the domestic economic activities rebounded in the first four months of 2022 compared to 2021.

!Gawaxab was speaking during the announcement of the Monetary Policy Statement (MPS) here, saying, while the domestic economic activity improved and growth in the Private Sector Credit Extension (PSCE) increased marginally, the inflationary pressures remained elevated.

Growth in the PSCE increased to 2.9 per cent during the first four months of 2022, higher than the 2.3 per cent registered during the same period in 2021 due to increased credit demand by both businesses and individuals.

Despite this improvement in the PSCE, the growth rate remains historically low, indicative of subdued conditions in the credit market.

“The recovery is mainly driven by increased activity in the mining, agriculture, transport, tourism, wholesale and retail trade as well as communication sectors. However, the positive performance was offset by a continued decline in the construction activity over the same period,” he said, adding that both the private and public construction slackened further.

!Gawaxab said going forward the domestic economy is expected to grow by around three per cent in 2022.

“Risks to the domestic economic outlook in the medium term continue to be dominated by the Russia-Ukraine war, climatic swings, global supply chain disruptions, higher oil and food prices and the possible emergence of new Covid-19 variants,” he explained.

He further explained that domestic inflation accelerated to 4.9 per cent during the first five months of 2022 compared to 3.2 per cent in the corresponding period of 2021.

The inflation was driven mainly by the increases in transport, housing and food inflation, especially on the international platforms.

As for the international reserves, !Gawaxab said they currently stand at N.dollars 43.9 billion compared to N.dollars 43.8 billion reported at the end of March 2022.

This increase was partly due to currency depreciation and Southern African Customs Union receipts.

These reserves are estimated to cover 5.4 months of imports and are adequate to meet the country’s international financial obligations.

The BoN on Wednesday announced an increase of the repo rate by 50 basis points from 4.25 to 4.75 basis points.

Source: The Namibian Press Agency