Category Archives: Economic Research

Economic Research

Building Plans – October 2015

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A total of 211 building plans valued at N$248.4 million were approved by the City of Windhoek in October 2015, with one commercial property to be built in Lafrenz, valued at N$102.0 million. On a year to date basis, 2,176 plans were approved with a value of N$1.792 billion, versus 2,479 plans valued at N$1.924 billion for the same period last year. This represents a 6.9% 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 projects were approved by the municipality in February 2014, however, this rate improved from 16.0% in September, largely due to the Lafrenz property approved in October this year. The below chart illustrates the value of plans approved on a tear to date basis compared to previous years.

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The 12-month cumulative value of plans approved increased for the first time in six months, up from N$2.004 billion in September to N$2.166 billion this month, however, the figure is still 3.4% less than a year ago. The cumulative number of plans approved continued to fall, down from 2,553 in September to 2,543 in October. 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.

 

Namibia CPI – October 2015

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The Namibian annual inflation rate increased slightly to 3.4% in October, up from 3.3% in September. On a month on month basis prices rose by 0.2% compared to 0.1% in September. On a year on year basis, the basket categories food, alcoholic beverages, housing utilities and hotels grew at a faster rate in October than in September while the other categories slowed somewhat dragging down overall inflation. Year on year inflation is again well below average, largely due to a drop in the price of oil over the past year, and the knock on effects this has on prices, as well as the heavy weighted basket items (food and non-alcoholic beverages and housing utilities) experiencing prolonged inflation below the basket average. 12 month average inflation reached a new low of 3.6%, and has been coming down steadily since November 2014.

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The five basket categories that experienced accelerated annual inflation were food and non-alcoholic beverages, clothing and footwear, housing, water, electricity, gas, and other fuels, and health, as well as hotels, cafes and restaurants. Accelerating price increases in the food and non-alcoholic beverages basket category was driven by sugar, honey and confectionery prices rising relatively more quickly, followed by coffee, tea and cocoa as well as oils and fats price inflation accelerating. Faster price increases in the clothing and foot wear basket category was spread relatively evenly amongst the components of this category. All components within the housing utilities category, except water supply and sewage services contributed to the basket’s accelerating pace of inflation. Health prices experienced a price increase of 5.8% year on year and 0.4% month on month.

The transport basket category continues to be a drag on overall inflation, exhibiting year on year inflation of -2.4% and month on month inflation of -0.2%. Transport is the third largest basket category by weighting and as such has a large impact on overall inflation. The deflation experienced by this basket category is largely due to the operation of personal transportation equipment becoming less expensive. Prolonged lower fuel prices due to the oil rout have provided consumers with some respite worldwide and to a large extent in Namibia. The effects of cheap transportation flow through to many other basket categories and in this way contributes to lower overall inflation.

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We continue to expect inflation to pick up towards year end as the full benefit of cheap oil is reach and the weak currency causes import prices to rise. Looming drought conditions as well as increasing utilities costs should further see inflation pick up in basket categories such as food and non-alcoholic beverages, and alcoholic beverages and tobacco.

 

New Vehicle Sales – October 2015

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A total of 1,767 new vehicles were sold in Namibia during October. New vehicle sales decreased by 15.5% year on year, but increased 7.4% month on month. At this point of the year, 17,942 vehicles have been sold so far in 2015, down 1% on the comparable period of 2014.  Thus Namibia is no longer on track for a record year of new vehicle sales, the declining rate of growth of new vehicle sales suggests that we may see a contraction. The 12-month cumulative measure of new vehicles sold decreased further to 21,765 in October from a high of 22,664 in April, largely due to an elevated base and strong vehicle sales in 2014.

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Passenger vehicle sales rose by 6.4% month on month, from 683 in September to 727 in October, down from a high of 910 in March this year. On a year to date basis, sales of passenger vehicles slowed further by 2.6% to 7,833, while year on year sales fell by 13.8% off a high base. 2014 saw exceptional growth in passenger vehicle sales, setting a high base, which has proven to be unsustainable as the year to date percentage change in vehicle sales has shown.

Commercial vehicle sales increased by 8.0% month on month as 1,040 vehicles sold. On a year on year basis commercial vehicle sales decreased by 16.7%, and is now only marginally higher than for the same period last year. Thus while the year to date figure is still above last year’s, the growth rate in commercial vehicle sales is declining steadily, although off a high base. Light commercial vehicle sales increased by 9.9% month on month but once again fell 18.9% year on year. Medium commercial vehicle sales rose 22.9% month on month and 95.5% year on year, largely due to the low number of vehicles sold in this category. Heavy commercial vehicle sales fell by 18.5% month on month and 16.5% year on year. Medium and Heavy commercial vehicle sales figures fluctuate greatly due to the low numbers of these vehicles that are sold on a monthly basis. On a year to date basis both medium and heavy commercial vehicle sales are still on track for a record year while light commercial sales figures have declined to below last year’s level.

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Toyota once again topped the number of vehicles sold per brand for the month at 616, a market share of 34.9%. 250 or 34.4% of the 727 passenger vehicles sold during the month were Toyotas, as well as 365 or 39.2% of the 931 light commercial vehicles sold. Volkswagen moved 144 passenger vehicles or 19.8% of the total sold during the month. Volkswagen’s market share was 11.3% of the total. Nissan gained market share this month with 9.6% of the total vehicle sales while Ford managed a steady 7.5% market share for the month.

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The Bottom Line

We have seen exceptionally strong vehicle sales growth through 2014, fuelled by a strong consumer base supported by expansionary fiscal policy and real wage growth, but the latest figures show that this trend is losing momentum. Strong vehicle sales in 2014 have elevated the base substantially which has led to lower percentage growth figures, although the number of vehicles sold as a whole is still strong. We expect to see vehicle sales normalising somewhat at the levels seen this year. Downside risks to this are rising interest rates which may limit marginal lenders from qualifying for financing as well as banking sector liquidity which may limit the amount of loans available to finance vehicle purchases.