Category Archives: Economic Research

Economic Research

New Vehicle Sales – July 2020

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A total of 666 new vehicles were sold in July, representing a 13.2% m/m decrease from the 767 new vehicles sold in June, and a 26.3% y/y decline from the 904 new vehicles sold in July 2019. Year-to-date 4,182 vehicles have been sold of which 1,757 were passenger vehicles, 2,156 were light commercial vehicles, and 270 were medium and heavy commercial vehicles. This is 32.8% lower than the total number of new vehicles sold during the same period last year. On a twelve-month cumulative basis, vehicle sales continued to dwindle with a total of 8,357 new vehicle sold as at July 2020, down 24.8% from the 11,119 sold over the comparable period a year ago, and the lowest since June 2005.

227 New passenger vehicles were sold during July, declining by 34.2% m/m. On a year-on-year basis new passenger vehicle sales were 40.6% lower than the 382 units sold in July 2019. Year-to-date passenger vehicle sales rose to 1,757, down 38.4% when compared to the number sold during the same period last year. Twelve-month cumulative passenger vehicle sales fell 4.3% m/m and 27.1% y/y. The demand for new passenger vehicles thus remains very low on the back of the weak economic climate.

A total of 439 new commercial vehicles were sold in July, representing a 4.0% m/m increase, but a 15.9% y/y contraction. This has been the third consecutive month of increases in new commercial vehicle sales which is somewhat encouraging, although the previous two increases were from a low base and the sales figures are still a far cry from those seen five to six years ago. Of the 439 commercial vehicles sold in July, 390 were classified as light commercial vehicles, 14 as medium commercial vehicles and 35 as heavy or extra heavy commercial vehicles. On a twelve-month cumulative basis, light commercial vehicle sales dropped 24.1% y/y, medium commercial vehicle sales fell 6.3%, and heavy commercial vehicle sales contracted by 19.9% y/y. This is the first time since September 2018 that all three these categories have recorded a decrease on a twelve-month cumulative basis.

Volkswagen continues to narrowly lead the passenger vehicle sales segment with 29.5% of the segment sales year-to-date. Toyota retained second place with 29.2% of the market share as at the end of July. They were followed by Kia and Hyundai with 6.4% and 5.6% of the market respectively, while the rest of the passenger vehicle market was shared by several other competitors.

Toyota remained the leader in the light commercial vehicle space with a dominant 56.4% market share, with Nissan in second place with a 13.4% market share. Ford and Isuzu claimed 10.6% and 7.7%, respectively, of the number of light commercial vehicles sold thus far in 2020. Mercedes leads the medium commercial vehicle segment with 31.3% of sales year-to-date. Mercedes was also number one in the heavy and extra-heavy vehicle segment with 21.3% of the market share year-to-date.

The Bottom Line

As expected, the demand for new vehicles remained sluggish in July with only 666 new vehicles sold during the month. New vehicle sales figures are currently trending at levels last seen in 2005. The figures suggest that that vehicle owners are either holding on to the vehicles they already own or are purchasing second hand and imported vehicles. We expect this to remain the case for the medium term as there is currently little indication that economic conditions will improve any time soon. On a rolling 12-month basis new vehicle sales are down 63.1% from the peak in April 2015, and down 24.8% y/y.

NCPI – July 2020

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The Namibian annual inflation rate remained unchanged at 2.1% y/y for a third consecutive month. Prices increased by 0.2% m/m, as inflationary pressures remain muted. On an annual basis, prices in three of the twelve basket categories rose at a quicker rate in July than in June. Two categories remained unchanged, while the rate of price increases in seven categories slowed for the month of July. Prices for goods rose by 2.4%, while prices for services increased by 1.6%.

Food & non-alcoholic beverages, the second largest basket item by weighting, continued to be the largest contributor to annual inflation, accounting for 1.1 percentage points of the total 2.1% inflation rate. Prices in this category increased by 0.7% m/m and 6.1% y/y. Prices in all thirteen sub-categories recorded increases on a year-on-year basis, with the largest increases being observed in the prices of fruit which increased by 14.7% y/y and vegetables which increased by 14.0% y/y. The prices of meat products recorded a faster increase in prices for seven consecutive months on an annual basis, increasing by 10.6% y/y in July.

The alcoholic beverages and tobacco basket item was the second largest contributor to the annual inflation rate in July, with prices of the basket item increasing by 0.8% m/m and 4.5% y/y. Prices for alcoholic beverages increased at a rate of 0.8% m/m and 4.4% y/y, while tobacco prices rose by 0.7% m/m and 4.6% y/y.

The education basket recorded inflation of 7.0% y/y, with the cost of pre-primary education growing at a rate of 5.6%. Primary and secondary education recorded price increases of 9.3% y/y, while tertiary education prices rose by 5.3% y/y. None of the three subcategories printed price increases on a month-on-month basis.

Zonal data shows that on a monthly basis prices increased by 0.2% in the northern zone 1, 0.3% in the central zone and remained steady in the mixed eastern, southern and western zone. On an annual basis, Windhoek and surrounding area, in zone 2, recorded the highest inflation rate at 2.5%, with the mixed zone 3 recording the lowest rate of annual inflation at 1.4%. Inflation in zone 2 (the northern region) slowed to 2.1% y/y.

We expect the Namibian inflation rate to have more or less troughed in the last couple of months. Despite inflationary pressure generally remaining very muted, we do expect a bit of an uptick in Namibian inflation in August after an increase in global oil prices led the Ministry of Mines and Energy to increase the prices of petrol and diesel by 100 cents per litre and 70 cents per litre, respectively, in the beginning of the month. We could see further increases in fuel prices during the rest of the year, depending on the recovery in global oil demand and the exchange rate. Despite the expected acceleration in Namibian inflation, we believe that inflationary pressure will remain relatively contained and that there will be enough room for the Bank of Namibia to cut interest rates further, by between 25-50 basis points at its August monetary policy meeting. IJG’s inflation model forecasts an average inflation rate of 2.1% y/y in 2020 and 3.5% in 2021.

Building Plans – July 2020

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A total of 245 building plans were approved by the City of Windhoek in July, 25 fewer than in June. In monetary terms, approvals decreased by N$32.6 million to N$141.1 million, an 18.8% m/m decline from June. The number of completions for the month of July stood at 253, valued at N$328.2 million. Year-to-date, N$966.3 million worth of building plans have been approved. On a twelve-month cumulative basis, 2,007 building plans were approved worth approximately N$1.96 billion, 6.9% higher in value terms than cumulative approvals as at July 2019.

The largest number of building plan approvals in July were made up of additions to properties. 171 additions to properties were approved with a value of N$60.0 million, 17.7% less in value terms than in July 2019. We continue to see more additions to properties being approved but with a lower overall value being added. Year-to-date 860 additions to properties have been approved with a value of N$389.8 million, a 10.4% y/y decline in value terms. 51 additions worth N$24.6 million were completed during the month.

New residential units accounted for 71 of the total 245 approvals registered in July, 5 fewer than the 76 residential units approved in June. In value terms, N$72.3 million worth of residential units were approved in July, which is in line with the value of residential approvals in June. Year-to-date 230 residential units have been approved, 14 more than during the corresponding period in 2019. In monetary terms, N$315.6 million worth of new residential plans have been approved year-to-date, a decrease of 11.3% when compared to the corresponding period last year. This indicates that while more residential units are planned to be built, it will be smaller or lower valued units than approved in the same period last year. 198 new residential units worth N$291.7 million were completed during the month.

Commercial and industrial building plans approved in July amounted to 3 units, worth N$8.8 million. On a year-to-date basis, the number of commercial and industrial approvals increased by 34.8% y/y in July to 31 units, worth approximately N$261.0 million, an increase of 25.1% y/y in value terms over the period ending July 2019. 4 commercial and industrial units worth N$11.9 million were completed during July.

During the last 12 months, 2,007 building plans have been approved, decreasing by 0.3% y/y in terms of number of approvals, but increasing by 6.9% y/y in terms of value. While there has been a slight up-tick in cumulative approvals over the last 3 months, the growth was driven mainly by approvals in additions to properties and new residential units which are of lower relative value. Growth in commercial and industrial construction activity remains extremely subdued.

City of Windhoek’s data shows that the average waiting period from submission to approval for residential and commercial units was 137 days, meaning that most of the submissions were done just before the lockdown period. It thus remains to be seen how many of these approvals will result in actual building activity as both businesses and consumers are still recovering from the impact of the lockdowns and are unlikely to still be in the financial position to go ahead with these building projects. We expect construction activity to remain under pressure over the short-term.