Category Archives: Economic Research

Economic Research

New Vehicle Sales – July 2015

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A total of 1,933 new vehicles were sold in Namibia during July. New vehicle sales increased by 1.1% year on year, and increased 4% on a year to date basis, to a total of 12,936. This figure keeps Namibia on track for a record year of new vehicle sales. The 12-month cumulative measure of new vehicles sold increased slightly from 22,434 in June to 22,455 in July.

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Passenger vehicle sales fell by 13.7% month on month, from 906 in June to 782 in July. June’s sales figure was the third-highest passenger vehicle sales month of all time in Namibia. On a year to date basis, sales of new passenger vehicles grew by 2.5% to 5,768, which is the highest figure on record. Year on year sales fell by 4.5%.

Commercial vehicle sales increased by an impressive 22.6% month on month to 1,151 vehicles sold, continuing after an increase of 8.3% last month. The total number of new commercial vehicles sold this year increased by 5.3% to 7,168, on track for the best-selling year on record. Sales of light commercial vehicles increased by 18.3% month to month and 4.3% year on year, rebounding after a fall of 15% year on year last month. Medium commercial vehicle sales rose by 45.8% month on month, yet decreased by 34% year on year, and heavy commercial vehicle sales rose by 84.3% month on month and 56.7% year on year. Sales of light, medium and heavy commercial vehicles are all on track for recording-breaking years, according to year to date figures.

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The Bottom Line

Current year to date vehicle sales are at record levels for all categories measured. This is a sign of positive consumer sentiment and indicative of a growing economy. A strong consumer base supported by expansionary fiscal policy and real wage growth should see this growth trend continue, although at a slower pace due to an elevated base set last year.

 

Namibia Inflation – July 2015

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NCPI 07 2015 (0)

The Namibian annual inflation rate rose to 3.3% in July, up from 3.0% in June. On a month on month basis prices rose by 0.4% compared to 0.3% in June, largely due to a month on month increase in transport costs. On a year on year basis half the basket categories grew at a faster rate than in June while the other half slowed further. Year on year inflation is still well below average at this stage, largely due to a drop in the price of oil over the past year, and the knock on effects this has on input prices, as well as the heaviest weighted basket item (housing, water and electricity, gas and other fuels) experiencing prolonged inflation of well below the basket average. 12-Month average inflation reached a new low of 4.1%, and has been coming down steadily since November 2014.

NCPI 07 2015 (2)

On a year on year basis, food and non-alcoholic beverages prices have increased by 5.3%, up from 4.1% in June, largely due to a pickup in the rate of inflation of fish, bread and cereal, non-alcoholic beverages, mineral water, and juice prices. The effects of lower input costs due to depressed fuel prices are still flowing through to food prices. This is not likely to persist for long as poor rainfall in Namibia and South Africa, should see prices rebound the end of the year.

Year on year alcoholic beverages and tobacco price inflation slowed to 6.9% versus 7.2% in June. Tobacco price inflation slowed while alcoholic beverage prices increased at a slightly faster rate than during the previous month. Clothing and footwear inflation slowed on a year on year basis while prices have come down marginally since June. Year on year inflation on housing, water, electricity, gas and other fuels continued to slow, posting a July figure of 2.1% versus 2.5% in June. This was largely due to water supply, sewage services and refuse collection inflation slowing on a year on year basis due to base effects. Rental payments for dwellings (both owners and renters) have increased by only 1.5% on a year on year basis, and have not increased on a month on month basis.

The largest contributor to monthly inflation was the increase in transport costs which was driven by an increase in fuel prices. We feel that oil prices will continue to fluctuate for some time to come but that fuel price changes will continue to be smoothed by the Ministry of Mines and Energy and hence occur relatively infrequently.

As expected inflation picked up slightly during July while still at well below average levels. We feel that increases in the rate of inflation will continue going forward, although at a sedate pace. Cost push factors such as the depreciating currency, poor rainfall, and electricity generation issues within the region, all pointing to higher future prices.

NCPI 07 2015 (1)

Building Plans – July 2015

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Picture1*June figures were used for plans completed

A total of 189 building plans valued at N$145 million were approved by the City of Windhoek in July 2015. On a year to date basis, 1,552 plans were approved with a value of N$1249.8 million, versus 1,679 plans valued at N$1505.8 million for the same period last year. This represents a 17% decrease in the value of plans approved on a year to date basis. This decrease is mainly due to base effects as three large commercial projectswere approved by the municipality in February 2014. On a month to date basis, the value of plans approved decreased by 13.2%, due to a fall in the value of approved commercial property and houses compared to June. The below chart illustrates the value of plans approved in July compared to previous months.

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The 12-month cumulative value of plans approved also fell from N$2057.2 million in June to N$2042.3 million this month, along with the cumulative number of plans approved, which fell from 2802 in June to 2719. These figures are presented in the charts below.

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In 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, since many of these plans occur outside the Windhoek municipal area, they are not captured in the monthly building plan statistics.