Category Archives: Economic Research

Economic Research

Building Plans – May 2023

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A total of 164 building plans was approved by the City of Windhoek in May, representing a 25.2% m/m increase from the 131 building plans approved in April. The approvals were valued at N$121.0 million, a 30.4% m/m drop from the N$173.4 million approved in April. Year-to-date, 725 building plans worth N$491.5 million have been approved, down 20.5% in number terms and 22.9% y/y less in value terms compared to the same period in 2022. On a twelve-month cumulative basis, 2,280 buildings worth N$1.61 billion were approved, a contraction of 3.2% y/y in number- and 10.0% y/y in value terms. 37 building plans worth N$82.9 million were completed during May.

May saw 128 additions to properties approved worth N$63.6 million. This figure represents the highest monthly value of approvals witnessed thus far in 2023. Year-to-date, 540 additions to properties worth N$210.8 million have been approved, representing an 8.8% drop in number terms and a 37.9% contraction in value terms compared to the corresponding period in 2022. On a 12-month cumulative basis, 1,623 additions worth N$758.3 million were approved over the past 12 months, compared to 1,550 additions worth N$783.2 million over the same period a year ago. 13additions worth N$5.32 million were completed during May, which falls below the average monthly additions completed so far this year.

A total of 31 new residential units valued at N$55.3 million were approved in May, exceeding the average monthly count of newly approved residential properties thus far this year. Moreover, May witnessed the highest residential approval value since November 2022. The 12-month cumulative new residential unit approval figure remained steady at 589, following 10 consecutive months of contraction. Year-to-date, 163 new residential units worth N$180.0 million have been approved, down 47.4% from the 308 units worth N$255.4 million approved over the same period a year ago. A total of 22 residential units valued at N$15.58 million were completed during May, marking the lowest residential completion figure observed year to date.

5 new commercial and industrial units worth N$1.92 million were approved in May. This brings 2023’s monthly average approvals to about 5 units worth N$20.2 million, up from N$13.6 million approved on average each month in 2022, but still well below the monthly average witnessed just prior to the pandemic, when N$45.9 million worth of units were approved on average each month in the 3 years leading up to the pandemic. 22 new commercial and industrial units valued at N$100.7 million have been approved year-to-date, an increase of 137.0% y/y in value terms. This increase is however mostly due to the relatively large N$76.7 million approval amount registered last month. On a rolling 12-month cumulative basis, 67 commercial and industrial units valued at N$221.1 million have been approved at the end of May, compared to 33 units worth N$162.8 million over the same period a year ago. 2 commercial and industrial units worth N$62.0 million were completed in May.

While May’s building plan approvals data was one of the better months so far this year, overall planned activity remains weak. 2023 is off to the slowest start in value terms since 2009, even before accounting for inflation.

According to the Q1 GDP data released by the Namibian Statistics Agency (NSA) in May, the construction sector recorded marginal quarter-on-quarter growth of 0.9% in real terms during the quarter of 2023. This growth comes after the sector had encountered six consecutive quarterly contractions. The NSA attributed the growth to a 13.2% increase in government construction spending during the quarter. The 12-month cumulative value of approvals has consistently been trending down in real terms for most part of the last decade, as the graph above shows.

New Vehicle Sales – May 2023

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982 New vehicles were sold in May, down 2.2% m/m from the 1,004 vehicles sold in April, but 27.7% more than in May 2022. Year-to-date 5,120 new vehicles have been sold, of which 2,579 were passenger vehicles, 2,245 light commercial vehicles, and 296 medium- and heavy commercial vehicles. In comparison, 4,314 new vehicles were sold during the first 5 months of 2022, and 4,050 in 2021. On a twelve-month cumulative basis, a total of 11,729 new vehicles were sold at the end of May, representing a 21.0% y/y increase from the 9,691 sold over the comparable period a year ago.

During the month, 505 new passenger vehicles were sold, surpassing the 493 monthly average over the last twelve months. Passenger vehicle sales rose by 7.9% m/m and 25.0% y/y. Of the 17 manufacturers who sold new passenger vehicles in May, 10 recorded a higher number of sales than in April. Year-to-date, 2,579 new passenger vehicles have been sold, 15.1% more than at the same point last year. On a twelve-month cumulative basis, new passenger vehicle sales rose to 5,913, up 21.2% y/y from the 4,877 vehicles sold over the corresponding period a year ago, and the highest 12-month cumulative figure since July 2017. 

A total of 477 new commercial vehicles were sold in May, a decline of 11.0% m/m but 30.7% more than in May 2022. This was the second consecutive month we saw commercial vehicle sales decline, with May’s figure coming in below the monthly average of 485 vehicles observed over the last twelve months. The 12-month cumulative commercial vehicle sales figure however continues to tick up, reaching 5,816 in May, an increase of 20.8% y/y, and the highest since March 2020. Light commercial vehicles continue to make up the bulk of the new commercial vehicle sales with 409 sold in May, followed by 46 heavy and extra heavy commercial vehicles and 22 medium commercial vehicles sold during the month. 

Toyota remains dominant in the new passenger vehicle sales segment with 39.3% of the segment sales year-to-date. The manufacturer has sold just over double the number of new passenger vehicles year-to-date than its closest competitor, Volkswagen. Volkswagen, which is sitting at 19.3% of segment sales year-to-date, is followed by Kia at 8.9%, and Haval and Suzuki, at 5.1% each.

Toyota also maintained its stronghold in the light commercial vehicle segment, claiming 53.3% of the sales year-to-date. Ford is next in line with 13.0% of the market share. Mercedes leads the medium commercial vehicle segment with 36.4% of the market share, while Scania remains on top in the heavy- and extra heavy commercial segment with 29.4% of the segment sales year-to-date

The Bottom Line  

Despite coming in somewhat softer in May, new vehicle sales remain relatively strong, evidenced by the 12-month cumulative figure continuing to tick up month after month and trending around early 2019 levels.  Both passenger and commercial vehicle segments have been recording positive year-on-year growth for 10 consecutive months, with rising interest rates seemingly doing little to dampen demand. 

NCPI May 2023

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Namibia’s annual inflation rate edged up to 6.3% y/y in May, after softening to 6.1% y/y in April. On a month-on-month basis, prices in the overall NCPI basket rose by 0.2% m/m, following the 0.4% m/m increase in April. On an annual basis, overall prices in seven of the twelve basket categories rose at a quicker rate in May than in April, four categories recorded slower rates of inflation while the education category posted steady inflation. Both goods and services inflation edged higher in May, with goods inflation coming in at 8.3% y/y and services inflation at a much more subdued 3.4% y/y.

Inflation Attribution

The Food and Non-Alcoholic beverages basket item was once again the largest contributor to Namibia’s annual inflation rate, contributing 2.4 percentage points in May. Prices of this basket item increased by 0.7% m/m and 12.5% y/y. Most of the sub-categories in this basket category witnessed slower annual inflation in May than in April but prices across the board remain relatively high. Fruits again posted the highest year-on-year inflation at 22.1% y/y in May (April: 29.1% y/y) while prices of items in the sub-category fell by 1.7% m/m. Fish saw the highest month-on month inflation with prices in this subcategory increasing by 4.5% m/m and 13.3% y/y. Oils and fats posted the most notable drop in inflation in May. Prices in this sub-category fell by 1.7% m/m while annual inflation slowed to 0.3% y/y in May (April: 10.7%).

The Alcohol and Tobacco basket item was the second largest contributor to May’s inflation print, contributing 1.0 percentage points. Prices in this basket item rose by 0.7% m/m and 7.5% y/y, slightly up from the 0.6% m/m and 6.7% y/y witnessed in April. Prices of alcohol products rose by 0.7% m/m and 8.4% y/y, while tobacco product prices rose by 0.9% m/m and 3.5% y/y in May. All of the sub-categories in this basket item registered faster annual inflation in May than in April, bar Liqueurs which saw prices deflate by 1.8% y/y.

Transport was the largest contributor to inflation among the remaining basket items, edging Housing, Water, Electricity as one of the top three contributors to Namibia’s annual inflation rate, despite prices in this basket item dropping by 0.6% m/m. Public transport services inflation remained fairly steady at 0.1% m/m and 1.0% y/y. The operation of personal transport equipment inflation rose by 4.7% y/y in May, while the cost of operating personal transport equipment fell 1.1% m/m. The Ministry of Mines and Energy’s decision to lower the price of diesel 50ppm and 10ppm by 80c/litre and 60c/litre, respectively, with effect from June should bring further price relief for this sub-category going forward. Inflation on vehicles purchases slowed to 0.4% m/m and 6.5% y/y, from 1.1% m/m and 6.3% y/y a month earlier.

Outlook

Namibia’s inflation rate witnessed a slight increase in May, primarily driven by food price pressures that persist as a dominant factor in the inflation dynamics.

Despite these developments, it is expected that the annual inflation rate in Namibia will gradually decrease in the coming months. This is primarily due to base effects impacting the Transport category, as fuel prices are now only marginally higher compared to a year ago. However, if currency weakness persists, we could see upward price pressure on goods, resulting in a prolonged period of elevated inflation. The Bank of Namibia is expected to closely monitor these developments, and it may require implementing additional rate hikes beyond current expectations, similar to the situation observed in neighbouring South Africa.

IJG’s inflation model continues to forecast a gradual deceleration in the annual inflation rate over the coming months, before ending the year at around 4.8%.