Monetary policy announcement dates set

The first monetary policy announcement for the year will take place on 15 February 2023, the Bank of Namibia (BoN) has announced.

The second and third monetary policy announcements are expected to take place on 19 April and 14 June 2023. The last three monetary announcements are expected to take place 16 August, 25 October and 6 December 2023.

In 2022, the central bank increased the repo rate by 300 basis points (3%). At the last monetary policy announcement for the year 2022 in December, the Bank of Namibia increased the repo rate by 50 basis points (bps) from 6.25% to 6.75%.

The prime lending rate in Namibia currently stands at 10.5%, on par with South Africa. In 2022, the South African Reserve Bank (SARB) increased the repo rate by 325 basis points (3.25%). At the last monetary policy announcement in 2022, the SARB increased the repo rate by 75 basis points to 7%.

Despite the 25 basis points differential in the repo rates in the two countries, the prime lending rates are aligned at 10.5%.

The SARB monetary policy committee (MPC) dates for 2023 are before the Bank of Namibia’s monetary policy announcement dates.

The monetary policy committee of the South African Reserve Bank will first meet on 26 January, followed by 30 March, 25 May, 20 July, 21 September and 23 November 2023.

“We expect another 25bps – as opposed to 50bps – hike by SARB in January 2023 which is in line with the Forward Rate Agreement (FRA) curve which factors in about another 25bps hike in South Africa by the end of the first quarter of 2023,” Simonis Storm said.

Simonis Storm further expects a 25 basis points hike by the Bank of Namibia in February or for the repo rate to remain unchanged.

INFLATION

According to the Namibia Statistics Agency (NSA), the annual rate of inflation came in at 7.0% year-on-year in November 2022, compared to 7.1% that was recorded for both September 2022 and October 2022. The two main drivers of inflation was transport and food, and non-alcoholic beverages.

The transport category registered an annual inflation rate of 18.3% in November 2023, while the food and non-alcoholic beverages category recorded and annual inflation rate of 9.4% in November 2022.

“Although global food prices are declining, food price inflation still remains high in Namibia,” Simonis Storm said.

On a positive note, the Ministry of Mines and Energy recently announced a decrease in fuel prices for the month of January 2023. As of Wednesday last week, the price of petrol decreased by N$1.80 per litre, while diesel decreased by N$2.20 per litre.

The price of petrol at Walvis Bay, which is the port of entry, is N$18.28 per litre and N$20.65 per litre for diesel.

GDP

Looking at the performance of the domestic economy, a growth of 4.3% was recorded during the third quarter (July to September) of 2022, a decline when compared to 5.6% in the corresponding quarter of 2021.

The slowdown in economic activities was attributed by contractions recorded in the agriculture and forestry (0.5%), fishing and processing on board (0.1%), construction (0.2%), financial activities (0.4%) and public administration (0.4%) sectors, NSA said.

Real gross domestic product (GDP) was estimated at N$35.5 billion during the third quarter of 2022, compared to N$34 billion recorded in the corresponding quarter of 2021.

In the first and second quarter of 2022, real GDP stood at N$34.4 billion and N$36.2 billion, respectively.

Moreover, South Africa’s economic activity in the third quarter of 2022 increased in the primary, secondary and tertiary sectors. The expansion in real gross domestic product (GDP) of 1.6% in the third quarter was boosted by, in particular, the agricultural and the finance, insurance, real estate and business services sectors. Despite large deviations among sectors, the level of real GDP surpassed the level it was before the onset of the coronavirus disease 2019 (COVID-19) pandemic and was 2.3% higher in the first three quarters of 2022 compared with the corresponding period in the previous year, according to SARB quarterly bulletin.

The real output of the primary sector in the third quarter of 2022 reflected higher production volumes in especially the agricultural sector. Agricultural production in the third quarter benefitted from higher field crops and the increased output of horticultural products but was still significantly lower in the first three quarters of 2022 compared with the same period in 2021 as input costs rose sharply alongside the persistence of foot and mouth disease, SARB [email protected]