Economy staggers in first quarter
By Hilary Mare
DURING the first quarter of 2021, activity in the domestic economy slowed driven by weak performances in most key sectors of the economy, the Bank of Namibia (BoN) has said.
Declines were observed in livestock marketing activity and in the mining, construction, manufacturing, wholesale and retail trade and tourism sectors which continued to endure the impact of the Covid-19 pandemic.
“The mining sector decline was attributed to lower production of diamonds, zinc concentrate and gold. Livestock marketing activity in the agricultural sector declined due to restocking by farmers.
“Activity in the construction sector declined, as both government and private construction works weakened and the tourism sector remained depressed, as reflected in lower numbers of tourist arrivals,” Dr Emma Haiyambo, the director of strategic communications and financial sector development at BoN said last week adding that the manufacturing sector decline was driven mainly by lower output of refined zinc, blister copper and beer.
“Likewise, real turnover in the wholesale and retail trade sector decreased during the quarter under review, due to low demand, as the impact of the Covid-19 pandemic continued to persist. Signs of improvement were, however, observed in the sea cargo volumes and new vehicles sold, while communication sector value added also continued to rise during the period under review,” she extended.
On the other hand, Haiyambo also noted that Namibia’s inflation rate rose during the first quarter of 2021, driven mainly by higher inflation for food and housing. Inflation rose to 2.8 percent during the first quarter of 2021 from 2.3 percent during the corresponding quarter of 2020.
“The rise largely originated from inflation for the categories of food and housing during the period under review. Food prices increased on account of supply constraints particularly for meat, while rent deflation recorded in 2020 in the rental payment for dwelling subcategory made way for moderate rent increases in 2021.
“The inflation rate accelerated notably to 3.9 percent in April 2021, mainly driven by inflation for transport and housing, water, electricity, gas and other fuels, before moderating only marginally to 3.8 percent in May 2021.”
Haiyambo went on to say that growth in both money supply (M2) and credit extended to the private sector slowed during the first quarter of 2021.
The 12-month growth in broad money supply slowed during the first quarter of 2021 driven by a deceleration in claims on other sectors in the form of credit extended to the private sector.
“Growth in credit extended to the private sector slowed to 2.0 percent in the first quarter of 2021 from 6.1 percent during the corresponding quarter of 2020, mainly due to lower demand for credit and more cautious supply. Furthermore, money market interest rates moved broadly sideways at significantly lower levels than a year ago, consistent with the Bank of Namibia’s repo rate,” concluded Haiyambo.