Category Archives: Economic Research

Economic Research

Building Plans – July 2022

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A total of 296 building plans were approved by the City of Windhoek during July, representing a 30.4% m/m increase from the 227 building plans approved in June. In value terms, the approvals were valued at N$282.0 million, an increase of 138.5% m/m from a downward revised N$118.2 million in June. Year-to-date 1,435 building plans were approved worth N$1.04 billion, increasing by 7.2% y/y in number terms but declining 4.6% y/y in value terms. On a twelve-month cumulative basis, 2,548 buildings with a combined value of N$1.91 billion were approved, rising by 2.0% y/y in terms of the number of plans approved but declining 3.1% y/y in value terms over the prior 12-month period. 79 building plans worth N$51.2 million were completed during July.

Additions to properties continue to make up the lion’s share of building plans approvals in both number and value terms, as has been the case since the beginning of the year. 179 additions to properties worth N$107.1 million were approved in July, increasing by 17.0% m/m in number terms and 121.2% m/m in value terms from a downward revised N$48.4 million in June. 46 Additions worth N$6.83 million were completed during July.

New residential units were the second largest contributor to the number and value of building plans approved with 112 approvals recorded in July, compared to 69 in June. In value terms, N$168.8 million worth of residential units were approved during the month, a 206.9% m/m increase from June and the highest value since October 2020. On a year-on-year basis, the value of residential unit approvals increased by 110.0%, ending six consecutive months of declines. On a 12-month cumulative basis, residential unit approvals continued to fall, declining by 8.9% y/y in number terms and 19.0% y/y in value terms. 32 New residential units worth N$41.39 million were completed during July, a 30.2% m/m increase in terms of the value, despite declining by 31.9% m/m in terms of the number of units completed.

The number of new commercial and industrial unit approvals remained steady from last month. 5 New commercial units worth N$6.1 million were approved in July, declining 58.9% m/m from the N$14.8 million recorded last month. Year-to-date there have been 22 commercial building approvals worth N$63.4 million, which translates to a 5.9% y/y decline in the value of approvals, despite the number of commercial plan approvals being 10.0% higher y/y. On a rolling 12-month perspective, the number of commercial and industrial approvals increased to 39 units worth N$167.4 million, compared to the 30 units approved worth N$137.6 million over the same period a year ago. Only 1 commercial and industrial unit worth N$3.0 million was completed in July.

The twelve-month cumulative value of both building plans approved and completed ended a 5-months long downward trend both in nominal and inflation-adjusted terms as illustrated in the figures above and below. Despite this uptick, the twelve-month cumulative value of plans approved and completed contracted when compared to the corresponding period a year ago. The twelve-month cumulative value of plans approved declined by 3.1% y/y to N$1.91 billion as noted above, while the cumulative value of plans completed dropped by 6.9% y/y to N$1.01 billion. The twelve-month cumulative number of plans approved at 2,548 is above the twenty-year historical average of 2,447.

New Vehicle Sales – July 2022

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A total of 677 new vehicles were sold in July, representing a 22.4% m/m decline from the 872 new vehicles sold in June, and a 15.3% y/y drop from the 799 new vehicles sold July last year. Year-to-date 5,864 vehicles have been sold of which 3,055 were passenger vehicles, 2,442 were light commercial vehicles, and 367 were medium and heavy commercial vehicles. On a twelve-month cumulative basis, a total of 9,600 new vehicles were sold at the end of July, representing a 5.3% y/y increase from the 9,118 new vehicles sold over the comparable period a year ago.

382 new passenger vehicles were sold in July, the lowest monthly sales figure so far this year, down 11.6% from the 432 passenger vehicles sold in June. Toyota resumed full scale production again in July, after suspending production in April following the floods in KwaZulu-Natal. Despite Toyota ramping up its production at the plant, new passenger vehicles from Toyota declined by 27.1% m/m dipping below the 100 new vehicle sales mark for the second time this year. Year-to-date passenger vehicles sales rose to 3,055 in July, 14.6% higher than during the same period in 2021 and 73.6% higher than the same period in 2020. On a 12-month cumulative basis, new passenger vehicle sales increased by 18.4% y/y to 4,874.

Following the uptick in commercial vehicle sales in June when 440 units were sold, new commercial vehicles sales fell to 295 in July, contracting by 33.0% m/m and 28.2% y/y. Light commercial vehicles continue to make up the bulk of the new commercial vehicle sales with 266 sold in July, followed by 17 heavy and extra heavy commercial vehicles and 12 medium commercial vehicles. Like the passenger vehicle sales, light commercial vehicles from Toyota declined and reached its lowest monthly sales level in two years. Light commercial vehicle sales from Nissan also recorded a sharp decline down 39.7% m/m from June, albeit from a high base. On a twelve-month cumulative basis, light and medium commercial vehicle sales fell 6.5% y/y and 6.3% y/y, respectively, while heavy commercial vehicle sales rose 3.2% y/y.

Despite having lower sales in July, Toyota continues to lead the new passenger vehicle sales segment with 30.3% of the segment sales year-to-date, followed by Volkswagen with 20.9% of the market share. The two top brands maintained their large gap over the rest of the market with Kia and Suzuki following with 9.4% and 8.0% of the market, respectively, leaving the remaining 31.5% of the market to other brands.

On a year-to-date basis, Toyota maintained its dominance in the light commercial vehicle space with a 45.3% market share, followed by Nissan with 14.0%. Hino continues to lead the medium commercial vehicle segment with 28.7% of sales year-to-date, closely followed by Mercedes-Benz with 24.1% market share. Scania retains its position as the leader in the heavy and extra-heavy commercial vehicle segment with 31.4% market share year-to-date.

The Bottom Line

New vehicle sales slumped in July. July’s sales figure is the lowest so far in 2022 but still in line with the monthly average for the year. On a 12-month cumulative basis, new passenger vehicle sales were 0.1% lower than in June, decreasing for the first time after rising for 19 consecutive months, possibly supply side driven by the flood induced problems for Toyota in South Africa. With the Toyota production plant in KwaZulu-Natal having re-commenced production in July, vehicle sales are expected to recover marginally. New commercial vehicle sales also contracted by 5.5% on a 12-month cumulative basis. Overall, year-to-date new vehicle sales are still roughly in line with those of 2021.

NCPI July 2022

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The Namibian annual inflation rate rose to 6.8% y/y in July, the quickest pace since March 2017. On a month-on-month basis, inflation remained steady at 1.0% m/m. Year-on-year, overall prices in eight of the twelve basket categories rose at a quicker rate in July than in June, two categories experienced slower rates of inflation and two categories posted steady inflation. Prices for goods increased by 10.0% y/y, the fastest since February 2009, while prices for services rose by 2.5% y/y.

Transport, the third largest basket item by weighting, was the largest contributor to annual inflation, contributing 3.0 percentage point to the total 6.8% y/y inflation rate. Prices in this category increased by 3.0% m/m and by 20.9% y/y in July, the largest year-on-year increase on our records dating back to 2003. All three sub-categories in this basket recorded increases on a month-on-month basis. Operation of personal transport equipment recorded the largest increase in prices of 4.4% m/m and 35.5% y/y, attributable to the N$1.88 and N$1.34 per litre increase in petrol and diesel prices, respectively, at the start of July. Year-to-date, petrol and diesel prices are up 42.4% and 46.1% respectively. The purchase of vehicles sub-category recorded inflation of 0.9% m/m and 5.2% y/y. Prices of public transportation services rose 0.1% m/m, but fell 4.1% y/y.

Food & non-alcoholic beverages was the second largest contributor to the annual inflation rate in July, contributing 1.5 percentage points. Prices in this basket item rose 0.8% m/m and 8.4% y/y, the quickest year-on-year increase since February 2017. All sub-categories registered price increases on an annual basis. The largest increases were observed in the oils and fats sub-category, which increased by 26.5% y/y and fruits, which rose by 24.5% y/y. On a monthly basis, twelve of the thirteen sub-categories saw price increases with only the meat sub-category recording a price decrease of 1.1% m/m.

The third largest contributor to the annual inflation rate in July was the alcohol & tobacco basket item, recording inflation of 0.4% m/m and 5.4% y/y. The prices of alcoholic beverages increased by 0.4% m/m and 5.4% y/y while the price of tobacco products increased by 0.6% m/m and 5.4% y/y.

Namibia’s annual inflation rate has consistently been trending higher since August last year, and as mentioned earlier in the report, July’s print is the quickest since March 2017. While the rate is high, it is by no means extraordinary for Namibia, as it has reached (and breached) this level a couple of times over the past two decades. Rising transport and food prices continue to be the main drivers for Namibia’s inflation rate, with the two categories contributing 67% to the annual inflation rate in July. Higher transport costs should continue to filter through to other categories of goods and services via second round effects, but runaway domestic inflation is unlikely. A similarly high inflation rate in South Africa has prompted the South African Reserve Bank (SARB) to pick up the pace of tightening monetary policy, with the 75 bp rate hike in July coming in higher than most forecasts. The SARB appears to be front-loading rate increases, opting to stay ahead of central banks in developed markets, and reinforcing its commitment to anchoring inflation expectations and to preserve its credibility. We expect the Bank of Namibia’s MPC to respond in-kind at their August meeting. IJG’s inflation model currently forecasts the annual Namibian inflation rate to continue ticking higher over the next couple of months, and to average between 5.9% and 6.5% in 2022, before gradually moderating to an average of 5.6% in 2023.