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Economic activity remains strong

The Monetary Policy Committee (MPC) of the Central Bank of Lesotho (CBL) says the global economic activity was relatively strong in the first quarter of this year, amid heightened downside risks and indications of weakening global trade.

Central Bank governor Dr Retṧelisitsoe Matlanyane, explained on Wednesday that during the first quarter, output growth in the advanced economies remained relatively strong mainly driven by the robust economic activity in the United States (US). She said in the second quarter of 2019, the unemployment rate declined moderately in all the advanced economies.

“Global inflation rates remained low. Inflationary pressures eased in advanced economies, especially the US and the Euro Area; moderate increases were seen in Japan and the United Kingdom,” she said.

She said the monetary policy stance remained accommodative across the advanced economies, with most countries keeping their rates unchanged from March 2019 to date.

“The domestic economic activity slowed down in April 2019. The CBL measure of economic activity indicated that output had increased at lower rate of 1.0 per cent in April 2019 compared to an increase of1.3 per cent in the preceding month. This was mainly at the back of wear activity in the manufacturing sector of the economy,” Matlayane said.

She also mentioned that in the labor market, unemployment by the Lesotho National Development Cooperation-assisted firms declined further by 1.0 per cent on an annual basis, in the first quarter of 2019 following the decline of 2.2 percent in the fourth quarter of 2018.

“The inflation rate, measured by year-on-year percentage change in the consumer price index, declined to 5.6 per cent in June 2019 compared to 5.9 percent in May 2019. The major contributors to this deceleration were food and non-alcoholic beverages, housing, electricity, gas and other fuels and transport,” she further stated.

She said the Committee will continue to monitor the global developments and their likely impact on domestic macroeconomic conditions, especially the CBL net international reserves, with the aim of taking corrective action when needed.

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