Category Archives: Economic Research

Economic Research

Building Plans – May 2018

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A total of 161 building plans were approved in May by the City of Windhoek, which is three fewer the 164 approvals in April. In value terms, however, approvals increased by N$31.2 million to N$127.7 million, a 32.3% m/m increase from April. A total of 201 completions to the value of N$51.6 million were recorded in May. The year-to-date value of approved building plans reached N$653.9 million, 43.7% lower than the comparative period a year ago. On a twelve-month cumulative basis, 1,916 building plans were approved worth approximately N$1.7 billion, 27.7% lower in value terms than approvals as at the end of May 2017.

Of the total 161 plans approved in May, additions to properties accounted for 121 of these approvals. Year-to-date, 591 additions to properties have been approved, decreasing by 0.8% y/y but rising 24.3% y/y in value terms to N$446.6 million.

New residential units were the second largest contributor to the number of building plans approved with 37 approvals registered in May, only one more than the 36 approvals in April. Year-to-date, 133 new residential units have been approved, three fewer than during the corresponding period in 2017. In monetary terms, N$171.5 million worth of residential plans have been approved year-to-date, a contraction of 31.6% when compared to the corresponding period last year.

Commercial and industrial building plans approved in May amounted to 3 units, worth N$3.1 million. This is two more than in the prior month, but a decline of 61.3% m/m and 99.4% y/y in value terms. Year-to-date, 17 plans for commercial and industrial purposes have been approved, valued at N$35.9 million. This compares to 16 units valued at N$551.3 million approved over the same period in 2017. On a rolling 12-month perspective, the number of commercial and industrial approvals have decreased by 17.7% y/y in May to 51 units.

The 12-month cumulative number of building plans approved increased by 8.0% as at the end of May when compared to the corresponding period in 2017. A total of 1,916 building plans to the value of N$1.7 billion were approved over the last 12 months which represents a decrease in value of 27.7% y/y due to a single project worth N$501 million dropping out of the 12-month cumulative range. The number of building plans approved, on a cumulative 12-month basis, has been increasing steadily since December 2017.

Consumer and business confidence, as measured by the IJG Business Climate Monitor, showed improvement in April 2018, rising to 51.94 points from 50.87 in March. The leading indicator, however, fell to 43.75 points from 47.6 in March, as a result of reduced government spending, a weaker currency and slow private sector credit extension. This is an indication that forecasts for a sustained recovery from the recession observed in 2017 remain fragile. No relief is expected in terms of interest rate cuts or increased fiscal stimulus in the short term.

NCPI – May 2018

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The Namibian annual inflation rate ticked up to 3.8% in May, following the 3.6% y/y increase in prices recorded in April. On a month-on-month basis, prices increased 0.4%. On a year-on-year basis, overall prices in six of the basket categories rose at a quicker rate in May than in April, with four categories recording slower rates of inflation and two categories remained unchanged. Prices for goods increased by 3.6% y/y while prices for services increased by 4.2% y/y.

Due to its large weighting in the basket, housing and utilities remains the largest contributor to annual inflation. Annual inflation for this category increased by 3.3% y/y and 0.3% m/m. The regular maintenance and repair of dwellings subcategory recorded an increase in prices of 2.6% y/y, which is a slower rate of increase than the 3.2% y/y registered the previous month. On a monthly basis, prices in this subcategory increased slightly by 0.7%. Prices in the electricity, gas and other fuels subcategory increased by 1.7% m/m and 5.5% y/y. The rest of the subcategories remained unchanged month-on-month and showed slightly slower price increases year-on-year.

Transport was the second largest contributor to annual inflation, accounting for 0.7% of the total 3.8% annual inflation figure. Prices for transport rose by 5.6% y/y in May, marginally slower than the increase of 5.8% y/y recorded in April. Prices related to the purchases of vehicles increased by 6.6% y/y in May compared to the 7.3% y/y increase recorded in the preceding month. The price of oil has retreated form the highs of May as Saudi Arabia and Russia signalled they may increase output later this year to offset potential supply losses from Iran and Venezuela.

Alcoholic beverages and tobacco, the third largest category, saw slightly faster inflation of 5.4% y/y and 0.7% m/m. Tobacco prices increased by 2.1% y/y, while alcohol prices increased by 6.2% y/y.

Namibian annual inflation at 3.8% y/y continues trending lower than that of South Africa. South Africa’s consumer inflation rate jumped to 4.5% in April after reaching a seven-year low of 3.8% in March. The SARB stated that risks and uncertainties that could possibly affect the inflation rate have shifted to the upside. Furthermore, the weakening rand may push inflation higher, decreasing the likelihood that either the SARB or BoN will cut interest rates again in 2018. BoN yesterday announced that the MPC decided to keep the repo rate unchanged and stated that inflation is expected to average around 4% in 2018.

New Vehicle Sales – May 2018

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A total of 918 new vehicles were sold in May, representing an 11.3% m/m increase from the 825 vehicles sold in April, but 20.5% lower than in May 2017 when 1,155 new vehicles were sold. Year-to-date 4,804 vehicles have been sold of which 2,203 were passenger vehicles, 2,395 light commercial vehicles, and 206 medium and heavy commercial vehicles. From a rolling 12-month basis, a total of 12,438 new vehicles were sold at May 2018, representing a contraction of 16.1% from the 14,822 sold over the comparable period a year ago.

A total of 374 new passenger vehicles were sold during May, just 1 more than in April. From a year-on-year perspective however, May 2018 new passenger vehicle sales were 116 units lower than the 490 sold a year ago. The rolling 12-month vehicle sales continue to reflect weakness in the number of passenger vehicles sold, declining 15.2% as at May. Year-to-date passenger vehicle sales rose to 2,203, reflecting a 12.2% decline from May 2017.

544 Commercial vehicles were sold in May, representing a 20.4% m/m increase, but a contraction of 18.2% y/y. During the month, 507 light commercial vehicles, 18 medium commercial vehicles and 19 heavy commercial vehicles were sold. On a year-on-year basis, light commercial sales have declined by 15.5%, medium commercial sales contracted 28% and heavy and extra heavy sales have declined by 51.3%. On a twelve-month cumulative basis, commercial vehicle sales remain depressed with light commercial vehicle sales decreasing by 17.9% y/y, medium commercial vehicle sales declining 0.4% and heavy commercial vehicle sales dropping by 4.9% y/y.

Year-to-date, Toyota and Volkswagen continue to hold a strong market share in the passenger vehicle market based on the number of new vehicles sold, claiming 36.4% and 28.5% of the market respectively. They were followed by Hyundai and Kia at 5.4% and 4.7% respectively, while the rest of the passenger vehicle market continues to be shared by several competitors.

Toyota also remains the leader in the light commercial vehicle space with a 58.0% market share, with Nissan in second place with a 16.3% share. Ford and Isuzu claimed 7.6% and 6.0% of the number of light commercial vehicles for the year, respectively. Hino leads the medium commercial vehicle category with 43.3% of sales while Scania remains number one in the heavy and extra-heavy commercial vehicle segment with 23.3% of the market share year to date.

The Bottom Line

The outlook for new vehicle sales remains bleak with the cumulative number of new vehicle sales as at the end of May amounting to 12,438, representing a decline of over 45% from the peak of 22,664 new vehicle sales recorded in April 2015. Year-on-year, the cumulative number of new vehicles sold have contracted by 16.1% from the 14,822 cumulative sales recorded in May 2017. Preliminary national accounts released by the Namibian Statistics Agency (NSA) estimates that the Namibian economy contracted by 0.8% in 2017. New vehicle sales statistics are a lagging indicator, acting as a proxy of the depressed economic conditions present at moment. Reduced government spending, on capital assets in particular, continues to have an effect on the number of new vehicles sold. Tighter credit controls have further curbed consumer’s access to credit financing normally used for new vehicle purchases. The year-on-year decline in new vehicle sales further suggests that vehicle owners are holding on to the vehicles they already own. The Bank of Namibia today announced that the MPC decided to keep the repo rate unchanged, which means consumers and businesses alike will not be provided any reprieve in lowering their current debt servicing cost.