Category Archives: Economic Research

Economic Research

Building Plans – January 2018

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A total of 153 building plans were approved in January, representing a 32% m/m increase from the 116 building plans approved in December. In value terms, approvals increased by N$170 million from December’s N$100 million to N$269 million in January. January 2018 is getting off to a slower start in terms of the 153 plans approved, compared to January 2017 in which 171 building plans got the nod. In value terms however, January 2018 fared slightly better than January 2017, approving N$10 million more plans than the N$259 million approved in January 2017.  For completions, the y/y statistic paint a rather skewed picture given that the increases are calculated off a rather low base. Looking from a rolling 12-month perspective, a 50% increase in the number of completions is more reflective of the state of building plan completions which equates to 640 worth N$674 million.

Additions to existing properties made up the largest portion of the total building plan approvals in terms of both number and value. For the month of January 129 building plans were approved worth N$233 million, 49% more in value terms than in January 2017, although the number of plans approved dropped by almost 10%.

New residential units were the second largest contributor to the total building plans approved in January. Approvals for new residential units for January 2018 were 32% lower than they were in January 2017. 17 new units worth N$25 million were approved in January 2018, representing a 60% decline from the N$62 million approved in the first month of 2017.

The number of new commercial units approved in January amounted to 7, valued at N$12 milion. Almost the same number of approvals in January 2017 were worth N$40 million. On a rolling 12-month cumulative basis, the number of approvals contracted by 35% y/y, a trend that has been on the decline since March 2016.

The 12-month cumulative number of building plans approved ticked up slightly in January with a 4.6% y/y increase. A total 1,903 building plans to the value of N$ 2.2 billion were approved and represents an increase in value terms of 4.7% y/y. The number of building plans approved, on a cumulative 12-month basis, has been on the decline for the greater part of 2017. Depressed consumer and business confidence are pronounced by economic indicators such as building plans statistics. Consumers and institutions are currently under pressure and this is further amplified by the slowdown in the extension of credit to the private sector. There is optimism that rests squarely on interest rates that might offer some respite to the consumers and corporates alike. Inflation has moderated well within the SARB’s target band and the new political landscape provides for greater market sentiment and belief that SA will not be downgraded by Moody’s. Coupled with the need to kickstart a much-desired economic recovery might just set the scene for interest rates to be cut in SA and thus affording BoN the opportunity to follow suit.

NCPI – January 2018

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The Namibian annual inflation rate moderated markedly to 3.6% y/y in January following the 5.2% y/y increase in prices recorded in December. Inflation was 1.6% m/m, the largest monthly increase in prices within the last twelve months, as is usually the case in January due to rental price adjustments. The slowdown in annual inflation was mainly driven by the housing, water, electricity, gas and other fuels category which slowed to 3.6% in January from 9.2% observed in December. On a year on year basis, overall prices in four of the twelve basket categories rose at a quicker rate in January, with six categories recording slower rates of inflation and two categories saw unchanged rates of inflation. Prices for goods increased by 2.9% y/y, while prices for services increased by 4.4% y/y, a material slowdown from the 8.0% increase recorded in December.

Despite recording a substantially slower rate of inflation, housing and utilities remains the largest contributor to annual inflation by way of being the largest weighted category. Overall the housing and utilities category recorded inflation of 3.6 y/y, which is significantly lower than the 9.2% y/y increase in December. This lower rate of inflation was caused mainly by rental inflation which slowed from 9.7% y/y in January of 2017 to 2.6% y/y in January 2018. On a monthly basis, rental payments increased by 2.6%. Rental adjustments are put in effect at the beginning of the year and this base is often carried forward for the rest of the year. Lower rental inflation in January this year should thus translate to lower overall CPI figures for the rest of the year. The rest of the subcategories remained relatively unchanged m/m, with regular maintenance and repairs on dwellings increasing by 0.1% m/m while electricity, gas and other fuels increased by 0.3% m/m.

Transport, with a weighting of about 14%, serves as the third largest basket category, accounting for 0.8% of annual inflation in January and making it the second largest contributor this month. Transport costs increased by 0.6% m/m and 6.3% y/y. Oil prices rallied for much of January, reaching US$71 a barrel, the highest level since late 2014. A strengthening rand that began its surge mid-December, however, allowed for fuel pump prices to remain unchanged for a second consecutive month.

Inflation in the alcoholic beverages and tobacco category was 4.2% y/y and 0.2% m/m. Tobacco prices increased by 3.4% y/y, while alcohol prices increased at a slightly quicker pace of 4.4% y/y, according to the NSA.

Namibian annual inflation at 3.6% y/y is once again lower than that of South Africa, with South Africa inflation expected to average at 4.9% in 2018, according to the SARB’s January MPC statement. Food price inflation slowed since South Africa recovered from the drought, despite the current drought experienced in the Western Cape. Likewise, Namibia also emerged from the drought and experienced the same moderation in food inflation. Inflation expectations will further be driven by exchange rates, with the rand having strengthened since the transition of power within the ANC. The currency continued to gain ground following the parliamentary election of Cyril Ramaphosa as president of South Africa.