Category Archives: Economic Research

Economic Research

New Vehicle Sales – December 2022

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A total of 952 new vehicles were sold in December, down 8.9% m/m from the 1,045 vehicles sold in November, but an increase of 29.7% y/y from the 734 vehicles sold in December 2021. In total, 10,925 new vehicles have been sold in 2022, up by 15.9% y/y from the 9,973 vehicles sold in 2021 and the highest annual number of new vehicles sold since 2019. Of the total vehicles sold during the year, 5,576 were passenger vehicles, 4,638 light commercial vehicles, and 711 medium and heavy commercial vehicles.

504 new passenger vehicles were sold during November, 27 fewer than the 531 sold a month earlier, but an increase of 39.2% y/y from the 362 vehicles sold in December 2021. Toyota was the best seller in this segment after accumulating 31.3% of the sales in December. Volkswagen came in second place with 15.5% of December’s new passenger vehicle sales, followed by Land Rover which saw 65 new vehicles sold – notably more than it has sold for the whole of 2021. New passenger vehicle sales grew by 24.4% y/y in 2022 when compared to the 4,484 new vehicles sold a year prior. With 5,576 new vehicles sold in 2022, the year ended with the highest annual number of passenger vehicles sold since 2016.

448 new commercial vehicles were sold in December, 66 fewer than in November but up by 20.4% y/y from the 372 vehicles sold in December last year. Light commercial vehicle sales dropped by 16.6% m/m to 373 but rose by 18.4% y/y. Medium commercial vehicle sales climbed for the sixth consecutive month, growing by 34.6% m/m to 35, the highest number of medium commercial vehicles sold in a single month since July 2019, and almost double the number sold in December 2021. Heavy commercial vehicle sales remained steady after 40 vehicles were sold, one fewer than last month and slightly below the 42 sold on average in 2022. In total, 4,638 light commercial vehicles were sold in 2022, up by 11.0% y/y from the 4,178 sold in 2021. The total number of medium commercial vehicles sold during the year grew by 3.9% y/y after 211 vehicles were sold in this segment in 2022. The total number of heavy commercial vehicles sold in 2022 however contracted by 11.0% y/y to 500.

Toyota was the best seller in the new passenger vehicle sector with 33.0% of the segment’s sales in 2022. This a remarkable feat considering that Toyota had production challenges on some of their key models due to flood damage at its plant in KwaZulu-Natal for an extended period during the year. Volkswagen was the runner-up with 20.9% of the market share, followed by Kia and Suzuki with 9.3% and 7.5% of the market share, respectively. The other manufacturers, including Hyundai and Haval, consumed the remaining 29.4%.

Toyota was also the top seller in the light commercial vehicle space with 48.1% of the segment’s sales in 2022, followed by Ford with 12.3% of the market share and Nissan with 11.4%. Hino was the best seller in the medium commercial vehicle segment with 30.3% of the segment’s sales in 2022, followed by Mercedes with 26.1% of the market share and Toyota with 16.1%. In the heavy and extra-heavy commercial vehicle market, Scania came out on top with 26.2% of the market share in 2022, followed by Volvo Trucks with 21.0% of the market share and Mercedes with 14.4%.

The Bottom Line  

The 952 vehicles sold in December was the highest number recorded for the month of December since 2015 and pushed the total annual vehicle sales number to pre-pandemic levels, and above the 10,000 level for the first time since 2019, as shown in the year-to-date chart at the beginning of this post. Both passenger and commercial vehicle sales recorded strong growth in 2022. Sales in the heavy commercial vehicle segment contracted in 2022, following a strong recovery in 2021, while the light and medium commercial vehicle segments reported healthy sales growth for the year. Overall, the recovery of new vehicle sales in 2022 was remarkable to see against a backdrop of rising interest rates, and despite being a challenging economic year. But new vehicle sales continue to trail the levels seen prior to 2019 as the chart below depicts.

NCPI December 2022

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Namibia’s annual inflation rate softened to 6.9% y/y in December. Prices in the overall NCPI basket rose by 0.3% m/m, marginally slower than last month. Year-on-year, overall prices in six of the twelve categories rose at a quicker rate in December than in November, four categories experienced slower rates of inflation and two categories posted inflation rates consistent with those in November. Prices of goods increased by 9.6% y/y, steady from last month. Services inflation continues to trend well below goods inflation and slowed to 3.1% y/y in December.

Inflation Attribution

Transport inflation remained the largest contributor to Namibia’s annual inflation rate, contributing 2.21 percentage points to the annual inflation rate in December. Prices in this basket item rose by 14.3% y/y but contracted by 1.0% m/m, mainly due to the 125c per litre drop in the price of diesel that came into effect in early December. All the sub-categories in the transport basket item bar the purchase of vehicles recorded slower inflation on an annual basis in December. The purchase of vehicles sub-category recorded price increases of 0.2% m/m and 4.5% y/y. Prices in the operation of personal transport equipment sub-category fell by 1.6% m/m while inflation slowed to 22.6% y/y, the slowest over the past 8 months and a sign that the relatively lower oil prices started to filter into the operating costs. Notable price relief in this sub-category is almost certain to show again in next month’s inflation print after the Ministry of Mines and Energy lowered diesel prices by a further 220 cents per litre and petrol by 180 cents per litre at the beginning of January. Prices in the public transportation services sub-category climbed by 0.1% m/m and 1.4% y/y, the slowest annual rise in prices since July 2022.

The food & non-alcoholic beverages item was the second largest contributor to the annual inflation print, marginally behind the transport basket item after it contributed 2.19 percentage points in December. Prices in this basket item rose by a sizeable 2.2% m/m and 11.8% y/y, the steepest annual inflation print since January 2017. While inflation in four of the thirteen sub-categories slowed with 1 remaining steady, the bulk of the sub-categories in this basket item recorded price increases on an annual basis in December, strikingly for the 12th consecutive month. Oils and fats saw the largest prices increase on an annual basis, rising by 20.8% y/y, followed by fruits which saw prices rise by 20.5% y/y. Bread and cereals prices also saw a sharp increase in December, rising by 6.7% m/m and 18.2% y/y, the steepest annual price increase recorded in this sub-category over the past decade.

The alcohol & tobacco category was the third largest contributor to the inflation rate, marginally higher than Housing, Water and Electricity- and Furniture basket items. Inflation of alcohol and tobacco products slowed to 4.2% y/y in December, but continues to trend above the 3.8% inflation rate reported for this basket item a year ago. Housing, water and electricity inflation softened to 2.1% y/y, yet remained above the 1.2% y/y inflation reported in December last year. The prices of furniture increased by 10.6% y/y in December compared to 1.3% y/y a year ago.

Outlook

December saw Namibia’s annual inflation rate continuing to trend lower with the print falling below 7.0% for the first time since July 2022 and steadily moving back towards the upper end of the SARB’s target range.

While we expect inflation to continue to slow into 2023, a close eye will be kept on January’s print as the month usually marks the revision of rental prices in the NCPI basket, which anchors about a quarter of the inflation basket for the rest of the year. The current economic climate and property market dynamics have us believe that we could see another year of relatively low inflation in this line item for 2023, but somewhat higher than last year.

The SARB’s first MPC meeting for 2023 is scheduled to take place on 26 January. Recent below-expectation inflation numbers coupled with lower fuel prices and moderating food prices should all provide the SARB (and by extension the BoN) leeway to slow the pace of rate hikes.

IJG’s inflation model currently forecasts Namibia’s annual inflation rate to continue to steadily slow during the course of 2023, before reaching around 4.1% at the end of the year.

PSCE – November 2022

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Overall

Private sector credit (PSCE) rose by N$587.0 million or 0.5% m/m in November, bringing the cumulative credit outstanding to N$110.2 billion after normalising for interbank swaps accounted in non-resident private sector claims. Year-on-year, private sector credit grew by 3.2% in November, marginally quicker than the 3.0% y/y growth recorded in October. On a 12-month cumulative basis, N$3.46 billion worth of credit was extended to the private sector. Of the cumulative issuance, corporates borrowed N$1.37 billion and individuals took up N$2.52 billion.

Credit Extension to Individuals

Credit extended to individuals rose by 0.8% m/m and 4.1% y/y in November. Annual growth in all of the credit lines to individuals bar overdraft facilities picked up in November. Overdraft facilities to individuals contracted by 1.5% m/m and 1.9% y/y. Annual growth in this line item has been trending in the negative territory since March 2022. Mortgage loans to individuals recorded growth of 0.3% m/m and 2.2% y/y, albeit marginally slower than in October. Other loans and advances (consisting of credit card, personal, and term loans) grew by 3.5% m/m and 13.8% y/y, naturally picking up pace as the holiday season approached. Instalment credit annual growth also picked up pace as credit extended in this category rose by 0.8% m/m and 3.8% y/y.

Credit Extension to Corporates

Credit extended to corporates rose by 0.1% m/m and 3.1% y/y in November. The Bank of Namibia (BoN) ascribed the growth to higher demand for short term credit facilities by corporates in the fishing, energy and manufacturing sector during the period under review. The BoN further noted that the improved growth was tempered as a result of deleveraging by corporates in the services and manufacturing sectors. Mortgage loans increased by 0.3% m/m but fell 3.8% y/y. Overdrafts rose by 3.2% m/m but declined 1.0% y/y. Installment credit posted growth of 0.8% m/m and 11.0% y/y while other loans and advances to corporates contracted by 2.1% m/m but grew by 10.7% y/y.

Banking Sector Liquidity

The overall liquidity position of the commercial banks improved in November, growing by N$1.30 billion to an average of N$4.44 billion and ended the month at N$4.70 billion. The BoN attributed the improved liquidity position to inflows from rising diamond sales.

Money Supply and Reserves

Broad money supply (M2) contracted by N$842.3 million or 0.6% y/y to N$129.1 billion. The BoN ascribed the contraction to declining ‘other deposits’ coupled with lower growth in currency outside depository corporations during the review period. Foreign reserve balances fell by 2.3% m/m or N$1.04 billion to N$43.7 billion in November, which according to the BoN, was largely due to the redemption of the ZAR-denominated NAM01 bond during the review period.

Outlook

November saw the annual PSCE growth marginally higher compared to October. The BoN attributed the slightly higher growth in PSCE to increased demand for credit by the household sector and corporations in the fishing, energy, and manufacturing sectors as noted earlier. We expect PSCE growth to remain restrained over the short term and into 2023 due to rising borrowing costs and tepid economic activity dampening demand for new credit. We also see little on the supply side that would ignite demand for credit over this period.