Category Archives: Economic Research

Economic Research

Namibia CPI August 2014

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NamibiaNCPI AugustAnnual Inflation for August declined by 0.2 percentage points, to 5.4 percent as compared to 5.6 percent recorded a month earlier. On a monthly basis, the inflation rate increased to 0.3 percent from 0.2 percent. The annual decline in inflation was primarily on account of base effects, as well as price declines in a number of food category sub-items, and a decline in the cost of operation of personal transport equipment following fuel price decreases. On a monthly basis, the increase resulted from higher recorded prices in most groups comprising NCPI.

Over the past year the main drivers of inflation in Namibia were food and non-alcoholic beverage prices (up 8.6%), as well as the price of transport (up 7.1%) and education (up 8.1%). Only one NCPI basket category saw prices decrease over the year, namely communications (down 0.5%).

During August, however, annual food inflation saw a marginal decline of 0.4 percentage points, from 9.0% to 8.6%. This decline was largely driven by a month on month price decline in the sub-categories of oils and fats and vegetables.

Transport inflation declined from 8.5 to 7.1% between July and August, due to a decline in the fuel pump price during the month. Thus, the sub-component of operation of personal transport equipment, which contains fuel, declined by 2.2 percentage points, to 5.6% inflation year on year.

Pump_Prices_NamibiaFollowing inflation increases from November 2013 to June 2014 on account of a currency-depreciation pass-through to prices, lagged first round effects of this currency weakness appear to be abating, and the stronger currency from January to August 2014 appear to be causing prices to stabilise, albeit marginally.

Going forward, we continue to forecast average inflation of 5.7% in 2014, picking up to 6.3% in 2015. Additionally, as a result of strong growth in the Namibian economy over recent years, we are starting to witness demand driven increases in a number of administered and services prices, such as administered transport prices (taxi fares), education prices, property and rent prices, and utility prices (electricity, municipal costs etc.) Additionally, pervasive Rand and thus Namibia Dollar weakness continues to drive increases in the Namibia Dollar price of commodities relative to US dollar prices.

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Final National Accounts, 2013

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GDP Growth for 2013 revised up to 5.1%, from 4.4%

This afternoon the NSA released its final national accounts for 2013, following the release of the preliminary figures in Q1 of 2014.

What is immediately striking in this release is the magnitude of the change between the preliminary and final releases, as shown in the graph below. According to the statistics agency, these changes come about as the result of changes in methodology, designed to make the accounts more accurate.Slide2

As can be seen below, the changes stem from a number of sectors, with the overall effect of the change in figures being a revision of real growth from 4.4% in the preliminary accounts, to 5.1% in the final accounts. This 0.7 percentage point change represents a 16% revision in the growth figure for the year (noteworthy as well is the 120% change in the 2009 real growth figure, which takes the economy from a recession of 1.5% to expansion of 0.3%).

While we remain concerned about the constant changing of the national account figures, we do view the revision as positive when it comes to the accounts representing the reality on the ground (for 2013). Due to unprecedented levels of fiscal and monetary stimulus, coupled with a booming construction sector and abnormally high levels of FDI, we generally believe that growth figures for 2013 should have been higher than the previously reported 4.4%. The lower figures in 2010 to 2012 are, however, somewhat surprising.

We remain very bullish on the Namibian economy for 2014, however may tamper growth expectations marginally on account of base effects in the figures (no major change in real sector activity, however). We will review our growth forecast and carry out a more comprehensive report on the final national account figures over coming weeks.

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