Category Archives: Economic Research

Economic Research

New Vehicle Sales – March 2023

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1,226 new vehicles were sold in March, an increase of 11.4% m/m and 16.3% y/y, and the highest monthly total since July 2017. 3,134 new vehicles were sold during the first quarter, of which 1,606 were passenger vehicles, 1,363 light commercial vehicles, and 165 medium- and heavy commercial vehicles. By comparison, the first three months of 2022 saw 2,645 new vehicles sold, indicating a robust start to 2023 for new vehicle sales. On a 12-month cumulative basis, a total of 11,412 new vehicles were sold as at March 2023, representing an increase of 19.3% y/y from the 9,567 sold over the comparative period a year ago.

575 new passenger vehicles were sold during March, representing an increase of 3.2% m/m and 8.7% y/y. Year-to-date, new passenger vehicle sales rose to 1,606 in the first quarter, 16.8% higher than during the same period in 2022 and 42.0% higher than the first quarter of 2021. On a 12-month cumulative basis, new passenger vehicle sales climbed to 5,805, a 22.8% y/y increase from the 4,728 over the corresponding period a year ago.

New commercial vehicle sales were similarly strong in March, with 651 units sold during the month the highest monthly figure since November 2018. New commercial vehicle sales rose 19.7% m/m and 24.0% y/y. 580 light commercial vehicles, 23 medium commercial vehicles, and 48 heavy and extra heavy commercial vehicles were sold during the month. All categories recorded increases on a year-on-year basis, with light commercial vehicles being 24.2% higher than in March 2022, medium commercial vehicles up 53.3% y/y, and heavy and extra heavy up 11.6% y/y. On a twelve-month cumulative basis, light commercial vehicle sales are 20.1% higher than during the corresponding period a year ago, medium commercial vehicle sales are up 21.8% y/y, while heavy commercial vehicle sales contracted by 16.5% y/y.

Toyota continues to enjoy a strong lead in the new passenger vehicle sales segment, claiming 38.0% of the sales on a year-to-date basis, followed by Volkswagen with a 25.1% share. They were followed by Kia and Haval with 8.1% and 5.1% of the market, respectively, leaving the remaining 23.7% of the market to other brands.

Toyota also has a dominant lead in the light commercial vehicle segment with 54.6% of the sales year-to-date. Ford came in second place, claiming a market share of 10.7%. Mercedes leads the medium commercial vehicle segment with a 26.7% market share, while Scania is number one in the heavy- and extra heavy commercial segment with 25.7% of the market share year-to-date.

The Bottom Line  

Demand for new vehicles remained strong in March among all segments. The uptick in March was primarily driven by a 107 unit increase in commercial vehicle sales, supported by a strong passenger figure. The 2023 Q1 new passenger vehicle sales figure is the highest since 2017 and the 12-month cumulative sales figure is trending at its highest level since mid-2017. Q1 new commercial vehicle sales were the highest since 2018 and the 12-month cumulative sales figure is at its highest since March 2020. 

NCPI March 2023

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Namibia’s annual inflation rate remained unchanged at 7.2% y/y in March. On a month-on-month basis, prices in the overall NCPI basket rose by 0.6%, compared to a 0.4% m/m increase in February. On an annual basis, overall prices in five of the twelve basket categories rose at a quicker rate in March than in February, four categories recorded slower rates of inflation and three recorded inflation rates consistent with those in February. Inflation on goods and services remained steady at 10.1% y/y and 3.1% y/y, respectively.

Inflation Attribution
 
Food and non-alcoholic beverages remain the largest contributor to inflation, contributing 2.7 percentage points to March’s annual inflation print. Food and non-alcoholic beverage prices rose by 0.9% m/m and 14.6% y/y, the highest annual inflation print for this category since March 2009. Most of the sub-categories in this basket item posted higher annual inflation compared to February. Fruit again posted the highest inflation print of all the sub-categories. Fruit prices rose by 1.4% m/m and 29.1% y/y. Breads and cereals were the only sub-category registering slowing inflation. Prices in this sub-category, however, remained elevated after rising by 0.9% m/m and 20.8% y/y in March.
 
Transport was the second largest contributor to the annual inflation print in March, contributing 1.4 percentage points. Prices in this basket category rose by 1.9% m/m and by 9.2% y/y in March.  Operation of personal transport equipment inflation continued to decelerate with prices in this sub-category rising by 12.5% y/y compared to 14.2% y/y in February. The Ministry of Mines and Energy’s decision to leave the price of petrol and diesel unchanged for April means we could see the trend continue into next month’s inflation print. Purchase of vehicles inflation accelerated. Prices in this subcategory rose by 1.1% m/m while annual inflation increased to 6.0% from 5.3% in February. Public transportation services inflation decelerated slightly to 1.0% y/y from 1.1% y/y a month earlier while prices remained steady month-on-month.

As the graph above shows, the largest contributor to inflation among the remaining categories was the alcohol and tobacco basket item. Prices in this category rose by 0.2% m/m and 6.9% y/y in March compared to increases of 0.4% m/m and 7.1% y/y in February. Both alcohol and tobacco sub-categories posted slightly slower rates of inflation. Alcoholic beverage inflation slowed to 7.4% y/y from 7.6% y/y in February. White spirits continue to be a notable driver of inflation pressure in this sub-category with annual inflation on white spirits accelerating for the fourth consecutive month to 28.3% from 26.0% a month ago. Tobacco products inflation slowed to 4.8% y/y from 5.1% in February. Inflation on cigarettes remained steady at 5.8% y/y while pipe tobacco inflation slowed to 1.8% y/y from 2.9% y/y. in February. As noted in last months’ NCPI report, we anticipate more price pressures to come from this sub-category following the announcement of a steep rise in “sin taxes” on alcoholic beverages and tobacco products during February’s annual budget speech.

Outlook

March’s sticky inflation print of 7.2% comes as a surprise given that we expected some easing like we have seen from recent CPI prints in other parts of the world. This means that the much-anticipated disinflationary cycle has yet to come into effect, setting the stage for a prolonged restrictive monetary policy stance as was alluded to during last month’s report. 

The SARB raised its lending rate by a further 50bps in March, implying that its monetary policy committee is of the view that more needs to be done in terms of curbing inflation and bringing it within the target range. The Bank of Namibian (BoN) will almost certainly respond in kind when it holds its MPC meeting on 19 April. Namibia’s inflation has been trending slightly higher than South Africa’s in recent months as the graph above shows and this trend will also be on the radar of the BoN’s MPC when it decides on the extent of further tightening required to keep price stability and the currency peg in check.

IJG’s inflation model continue to predict a gradual slowdown in Namibia’s annual inflation rate over the remainder of year, before ending the year at around 4.8%.

PSCE – February 2023

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Overall

Private sector credit (PSCE) increased by N$664.2 million or 0.60% m/m in February, bringing the cumulative credit outstanding to N$111.3 billion on a normalised basis (removing the interbank swaps the Bank of Namibia (BoN) accounts for in non-resident private sector claims). Year-on-year PSCE growth stood at 3.1% in February, compared to a 2.6% y/y growth rate recorded in January. The past 12 months saw N$3.33 billion worth of credit extended to the private sector, a 40.1% increase from the N$2.38 billion issued over the same period a year ago. The cumulative 12-month period saw individuals taking up N$3.13 billion worth of credit, while corporates took up only N$203.1 million. 

Credit Extension to Individuals

Credit extended to individuals increased by 0.3% m/m and 5.0% y/y, the quickest year-on-year growth since June 2020. All sub-categories registered growth on a month-on-month basis for a third consecutive month. Mortgage loans were the biggest driver of the month-on-month increase, posting growth of 0.2% m/m and 2.8% y/y. ‘Other loans and advances’ (which is made up of credit card debt and personal- and term loans) continues to post robust growth, growing by 0.5% m/m and 17.8% y/y in February. Overdraft facilities to individuals rose by 1.6% m/m but fell by 1.1% y/y.

Credit Extension to Corporates

Credit extended to corporates increased by 1.0% m/m and 0.4% y/y. The primary growth driver in February was overdraft facilities to corporates which rose by 2.4% m/m but fell by 3.0% y/y. Mortgage loans climbed by 0.9% m/m but are down by 5.1% y/y, marking a fifth consecutive month of contraction on an annual basis. Instalment credit grew by 1.8% m/m and 11.6% y/y. Other loans and advances remained steady month-on-month but increased remains up by 5.3% y/y.

Banking Sector Liquidity 

The overall liquidity position of the commercial banks strengthened considerably during February, rising by N$2.18 billion and ending the month at N$7.18 billion. The BoN ascribed the increase to pension fund liquidations, proceeds from diamond sales as well as increased government payments. The repo balance fell from N$419.0 million at the start of the month to zero at the end.

Money Supply and Reserves

According to the BoN’s latest monetary statistics, broad money supply (M2) rose by N$2.67 billion or 2.1% y/y in February. The central bank’s stock of international reserves rose by 2.7% m/m or N$1.25 billion to N$47.5 billion. The BoN noted that the increase was due to “revaluation adjustments” and commercial bank inflows during the month. 

Outlook

PSCE growth ticked up slightly on both a monthly and annual basis in February. The monthly growth was primarily driven by increased corporate credit uptake, particularly from overdraft facilities. Credit uptake by individuals recorded notable growth as well on the back of a N$91.8 million month-on-month increase in mortgage loans. While the uptick in the year-on-year growth rate is positive, it has been trending well below inflation since May 2020, meaning that we have not seen positive PSCE growth in real terms for two-and-a-half years now. 

As we have highlighted in last month’s report, credit uptake by corporates has been particularly lacklustre since June last year, with only short-term ‘other loans and advances’ and instalment credit exhibiting positive growth on an annual basis.