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The repo rate is expected to go down by 25 basis points towards the end of the year.

FNB Namibia Economist, Ruusa Nandago, said this during the Economic Breakfast with FNB Commercial.

Nandago says that although the cutting cycle will be lower than what was witnessed during the hiking cycle,

Therefore, this will continue to impact private sector credit extensions and strain businesses.

The increase in the repo rate since 2022 was the steepest in Namibian history.

"We do see the repo rate sitting at 7, which is quite a high repo rate. The increase in the repo rate was the steepest in Namibian history. What we see moving forward is rate cuts by the end of this year. We expect 25 basis points rate cuts towards the end of this year. We expect a 25 basis point rate cut towards the end of the year. Our view is that the cutting cycle will be shallower than what we saw in the hiking cycle. Where you saw a quite steep increase coming down will be slow. This will continue to impact private sector credit extensions. Strain on the business as well."

Nandago further says an increase in foreign investment as a result of ongoing oil and gas exploration activities is a significant milestone in the country's economy.

"We've seen an increase in foreign investment coming into the country. It has been steep over the past years or so since independence. This is as a result of ongoing oil and gas exploration activities. Although not in production yet, we are seeing some activity in our economic indicators. What we have seen is that oil and FDI make up about 45 percent of FDI coming into the country. That is significant; it used to be captured by the mining sector."

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Photo Credits
Bank of Namibia

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Author
Selima Henock