Namibia's central bank left its benchmark repo rate at 6.75 percent and forecast that inflation would ease further and average 5.0 percent this year, down from 6.2 percent in 2017 and 6.7 percent in 2016.
The Bank of Namibia, which has kept its rate steady since cutting it by 25 basis points in August last year, added the drop in headline inflation last year was only due to a sharp fall in food and non-alcohol inflation as inflation for housing and transport accelerated.
In December, November and October last year Namibia's inflation rate was steady at 5.2 percent.
"The domestic economy remained weak in 2017," the central bank said, attributing this to a decline in construction, wholesale and retail trade along with slower growth in manufacturing, electricity and water, transport and communication.
On the other hand, mining and agriculture improved last year.
"Domestic growth is projected to start a gradual recovery in 2018," the central bank said.
Namibia's economy shrank by an annual 1.9 percent in the third quarter of last year as the economy continues to contract.
In the last 6 quarters, Namibia's Gross Domestic Product has contracted on an annual basis except for a 0.3 percent increase in the fourth quarter of 2016.
Growth in private sector credit growth also slowed last year, with annual growth of 6.6 percent, down from 11.4 percent in 2016.
Since the last meeting of the bank's monetary policy committee, growth in PSCE slowed further to 5.1 percent at the end of December from 5.2 percent in October.
