Author Archives: IJGResearch

Building Plans – May 2015

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Building Plans May 2015

A total of 195 building plans to the value of N$365 million were approved by the City of Windhoek in May 2015. On a year to date basis 1,073 plans were approved with a value of N$937.7 million versus 1,104 plans valued at N$1,158 million last May. On a year to date basis the value of plans approved was down 19% although recovering during May. On a month to date basis the value of plans approved rose 232%. The large increase in the value of total plans approved during the month is attributed to the value of additions to existing property growing significantly. The below chart illustrates the elevated value of plans approved in May, with only two months during the last five years exhibiting a higher value of plans approved.

Building Plans May 2015 2While the 12 months cumulative number of plans approved is still well down from peak levels, the 12 month cumulative value of plans approved has rebounded due to the strong values in May. The 12 month cumulative number of plans approved fell to 2,815 from 2,834 in April, while the 12 month cumulative value of plans approved rose from N$1,879 million to N$2,079 million.

Building Plans May 2015 3In our view the construction sector will remain one of the leading growth and development sectors for 2015 in the Namibian economy, with both private sector and government having aggressive development plans. However, many such plans fall out of the Windhoek municipal area, and as such are not captured in the monthly building plan statistics.

 

BON MPC Expectations – 17/06/2015

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In the build-up to the Bank of Namibia’s MPC meeting, we always get a lot of calls from companies, individuals and the media, looking for a view on what the Bank is expected to do.

As we usually do, we discussed this in our morning meeting today, and I personally am of the view that give the recent data releases in the country, a hike is not warranted at the current point in time. The reasons for this view are simple:

  1. According to the NSA, GDP growth is slowing, coming down from 5.1% in 2013 to 4.7% in 2014.
  2. PSCE growth remains high, however growth in household borrowing has slowed notably, to just 12.1%, well below nominal GDP growth suggesting household deleveraging relative to income, is taking place. Concern in this regard is that installment credit growth remains high, at 19.2% – very much the current concern of the Bank of Namibia.
  3. Headline inflation has slowed to just 2.9%, the lowest level in many many years. While much of the demand-pull inflation remains a lot higher than this (often over 10%), the overall price pressure on Namibian’s is relatively low by historic standards.
  4. Foreign reserves appear to have stabilized, albeit at a relatively low level when assessed in NAD terms. Also, this position is likely to recover further when the country’s new mines start exporting.

As such, while the Bank of Namibia is likely to remain on a rate-normalization path over coming months, there is no urgent need for higher rates in the current period or immediate future. I would thus say that there is a 75% probability of rates remaining flat, and a 25% chance of a 25bp (0.25%) hike. That said, I am notoriously awful at calling the BON moves, so may well be way off.