Category Archives: Economic Research

Economic Research

Namibia Inflation – June 2015

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The Namibian annual inflation rate remained unchanged at 3.0% in July. On a month on month basis, the inflation rate eased to 0.3%, as a result of slowing price increases in of food and non-alcoholic beverages as well as clothing and footwear. An equal number of CPI basket categories experienced increases and decreases in the rate of inflation on an annual basis.

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On a year on year basis, food prices have increased by 4.1%, down from 4.5% in May, due partly to an elevated base. 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, coupled with fuel price increases, should see prices start to increase again in the latter half of the year.

The alcoholic beverages and tobacco category continues to see prices rise at a more rapid rate than most of the basket categories, with twelve month average inflation picking up steam during the first half of the year. Prices increased 7.2% y/y during June, more or less in line with the rate recorded in May. The inflation rate was once again the single biggest contributor to the overall rise in prices experienced during the month.

Transport and fuel prices increased 0.6% on a monthly basis, although prices are still down on an annual basis. An increase in prices was largely expected due to the increase in oil prices and the modest increase in fuel prices that followed. The normalization of oil prices at current levels should mean that fuel prices will remain relatively stable at, or near current levels.

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Inflation for June came in roughly in line with our expectations but we feel that inflation will start to pick up through the remainder of the year. However, low levels of inflation in housing and utilities as well as deflation in transport prices on an annual basis should contribute to below trend levels of inflation for some months to come, and result in below average annual inflation. In the longer term, however, a pickup in annual rates is inevitable due to cost push factors such as the depreciating currency, poor rainfall, and electricity generation issues within the region, all pointing to higher future prices.

 

Vehicle Sales – June 2015

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A total of 1,845 new vehicles were sold in Namibia during June. New vehicle sales fell by 8.8% year on year, although this is due to the high base set last year. On a year to date basis new vehicle sales grew by 4.6% to 11,003, therefore still on track for a record year. The 12 month cumulative measure of new vehicles sold fell for a second month, down from 22,611 in May to 22,434 in June, largely due to the high base set in June 2014.

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Passenger vehicle sales rebounded 23.1% on a month on month basis after falling 15.4% last month. On a year to date basis sales of new passenger vehicles rose 3.7% to 4,986 vehicles sold, the highest figure on record. Year on year sales of new passenger vehicles grew by 1.5%, up from -3.8% last month. A total of 906 new passenger vehicles were sold during June, four vehicles short of the highest figure on record.

On a month on month basis new commercial vehicle sales rebounded 8.3% with a total of 939 vehicles driving off the showroom floors. The total number of new commercial vehicles sold for the year has increased by 5.3% to 6,017, on track for a record year. Sales of new light commercial vehicles jumped 9.4% month on month, although dropping 15% year on year, due to a high base in June last year. Sales of medium commercial vehicles rose by 20% over last month while sales of heavy commercial vehicles fell by 10.5% on a month on month basis. Both these metrics are on track for record sales on a yearly basis with record year to date figures.

Veh Jun2The Bottom Line

Current year to date vehicle sales are at record levels for all classes 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 the growth trend continue, although at a slower pace due to an elevated base set last year.

Building Plans – June 2015

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A total of 185 building plans to the value of N$167 million were approved by the City of Windhoek in June 2015. On a year to date basis 1,317 plans were approved with a value of N$1,104.8 million versus 1,361 plans valued at N$1,345.9 million for the same period last year. On a year to date basis the value of plans approved is down 17.9% although recovered during May. This year to date decrease in value of plans approved is mostly due base effects as three large commercial projects were approved by the municipality in February 2014. On a month to date basis the value of plans approved is down 54.3%. The large decrease in the value of total plans approved during the month is attributed to the value of additions to existing property approved during May. 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.

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While 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 and June. The 12 month cumulative number of plans approved fell to 2,802 from 2,815 in May, while the 12 month cumulative value of plans approved decreased from N$2,078.5 million to N$2,057.2 million.

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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, many such plans fall out of the Windhoek municipal area, and as such are not captured in the monthly building plan statistics.