Businesses boost credit uptake during May
The cost of borrowing increased in June
Private Sector credit Extension (PSCE) growth increased to 4.5% at the end of May 2022 relative to the 3.8% at the end of April 2022.
Businesses in the commercial and retail services sectors as well as the commercial rental property space were the main drivers of credit uptake during May 2022.
According to the Bank of Namibia (BoN), growth in credit extended to businesses increased to 7.4% at the end of May 2022, relative to a growth rate of 5.9% in April 2022.
The cost of borrowing (repo rate) in May stood at 4.25%. In June, the central bank increased the repo rate by 50 basis points to 4.75%, which makes borrowing expensive. Local analysts expect interest rates to continue increasing during the rest of the year due to inflationary pressures.
The Bank of Namibia noted that the increase in credit uptake by corporates started in April and reflects a rise in demand for short term asset-backed credit facilities and other loans and advances.
Regarding households, credit uptake slightly rose to 2.4% at the end of May 2022, compared to a growth rate of 2.2% reported at the end of the preceding month. The rise was dominant in mortgage credit and other loans and advances in the review period, BoN pointed out.
Overall, private sector credit extension growth increased to 4.5% at the end of May 2022 relative to the 3.8% at the end of April 2022.
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Overdraft credit contracted by 4.5% at the end of May from a less steep contraction of 3.8% at the end of the preceding month. The contraction was driven by repayments by corporates in the energy, mining, transport and government services sectors coupled with lower than usual demand from households during May, BoN said.
In addition, on an annual basis, growth in other loans and advances increased to 13.1% in May 2022 from 9.7% at the end of April 2022. The increase mainly stemmed from a rise in demand from corporates specifically in the commercial and retail services as well as commercial rental property space during the period under review, the central bank pointed out.
Moreover, instalment credit and leasing sales registered a growth rate of 5.8%, relative to a growth rate of 5.1% in the preceding month. “This is consistent with a recovery observed in the wholesale and retail trade sector, the increase mainly stemmed from corporates in the commercial services sector aided by a rise in floor plans,” BoN said.
Lastly, growth in mortgage credit moderated to 2.7% at the end of May 2022 from 2.8% at the end of April 2022. The growth in mortgage credit was sustained by a rise in demand from the households albeit being weighed down by a lower demand from the corporate sector during the period under review.
Price monster
Annual inflation rate in Namibia decreased to 5.4% in May 2022, a decrease of 0.2 percentage points compared to 5.6% recorded in April 2022. The decrease in inflation rate was mainly attributed to a decline in transport inflation. Despite the observed decrease, the level of inflation remains elevated on account of a rise in international oil prices and food prices, BoN said.
According to the Namibia Statistics Agency (NSA), Zone 2 (Windhoek) has been recording the highest inflation rates since the beginning of the year compared to other regions. Windhoek recorded an inflation rate of 6.3% in May 2022.
Zone 3 (//Kharas, Erongo, Hardap and Omaheke) recorded an inflation rate of 5.1% in May 2022.
Lastly, Zone 1 (Kavango East, Kavango West, Kunene, Ohangwena, Omusati, Oshana, Oshikoto, Otjozondjupa, and Zambezi) inflation rate stood at 4.8% during May [email protected]
According to the Bank of Namibia (BoN), growth in credit extended to businesses increased to 7.4% at the end of May 2022, relative to a growth rate of 5.9% in April 2022.
The cost of borrowing (repo rate) in May stood at 4.25%. In June, the central bank increased the repo rate by 50 basis points to 4.75%, which makes borrowing expensive. Local analysts expect interest rates to continue increasing during the rest of the year due to inflationary pressures.
The Bank of Namibia noted that the increase in credit uptake by corporates started in April and reflects a rise in demand for short term asset-backed credit facilities and other loans and advances.
Regarding households, credit uptake slightly rose to 2.4% at the end of May 2022, compared to a growth rate of 2.2% reported at the end of the preceding month. The rise was dominant in mortgage credit and other loans and advances in the review period, BoN pointed out.
Overall, private sector credit extension growth increased to 4.5% at the end of May 2022 relative to the 3.8% at the end of April 2022.
Categories
Overdraft credit contracted by 4.5% at the end of May from a less steep contraction of 3.8% at the end of the preceding month. The contraction was driven by repayments by corporates in the energy, mining, transport and government services sectors coupled with lower than usual demand from households during May, BoN said.
In addition, on an annual basis, growth in other loans and advances increased to 13.1% in May 2022 from 9.7% at the end of April 2022. The increase mainly stemmed from a rise in demand from corporates specifically in the commercial and retail services as well as commercial rental property space during the period under review, the central bank pointed out.
Moreover, instalment credit and leasing sales registered a growth rate of 5.8%, relative to a growth rate of 5.1% in the preceding month. “This is consistent with a recovery observed in the wholesale and retail trade sector, the increase mainly stemmed from corporates in the commercial services sector aided by a rise in floor plans,” BoN said.
Lastly, growth in mortgage credit moderated to 2.7% at the end of May 2022 from 2.8% at the end of April 2022. The growth in mortgage credit was sustained by a rise in demand from the households albeit being weighed down by a lower demand from the corporate sector during the period under review.
Price monster
Annual inflation rate in Namibia decreased to 5.4% in May 2022, a decrease of 0.2 percentage points compared to 5.6% recorded in April 2022. The decrease in inflation rate was mainly attributed to a decline in transport inflation. Despite the observed decrease, the level of inflation remains elevated on account of a rise in international oil prices and food prices, BoN said.
According to the Namibia Statistics Agency (NSA), Zone 2 (Windhoek) has been recording the highest inflation rates since the beginning of the year compared to other regions. Windhoek recorded an inflation rate of 6.3% in May 2022.
Zone 3 (//Kharas, Erongo, Hardap and Omaheke) recorded an inflation rate of 5.1% in May 2022.
Lastly, Zone 1 (Kavango East, Kavango West, Kunene, Ohangwena, Omusati, Oshana, Oshikoto, Otjozondjupa, and Zambezi) inflation rate stood at 4.8% during May [email protected]
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