Category Archives: Economic Research

Economic Research

NCPI – April 2020

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The Namibian annual inflation rate slowed to 1.6% in April, from 2.4% y/y in March. This is the lowest annual increase in inflation since June 2005. On a month-on-month basis, prices decreased by 0.3%, following the 0.1% m/m increase in March. Overall, prices in four of the basket categories rose at a faster annual rate than during the preceding, while eight rose at a slower rate. Prices for goods 2.2% y/y in April, while prices for services grew by 0.9%. 

The food & non-alcoholic beverages category displayed price increases of 1.1% m/m and 4.2% y/y in April, making it the largest contributor to annual inflation, accounting for 0.78 percentage points of the 1.6% annual inflation rate. Prices in all thirteen sub-categories recorded increases on a year-on-year basis, with the largest increases being observed in the prices of fruits, vegetables and coffee, tea and cocoa. 

The miscellaneous goods & services basket item was the second largest contributor to annual inflation, accounting for 0.3 percentage points of the total 1.6% annual inflation figure. The fact that the sixth largest basket item was one of the largest contributors to the annual inflation figure in April illustrates how low inflationary pressure is at the moment. The prices of miscellaneous goods & services rose by 0.3% m/m and 6.0% y/y in April. The only subcategories which showed increases on a month-on-month basis were personal care, which increased by 1.0% m/m, and personal effects, which increased by 0.1% m/m. Prices in all other subcategories remained steady during the month.

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

Zonal data shows that, on a monthly basis, prices declined by 0.4% in the northern and central zones while falling by 0.1% in the mixed east, south and western zone. On an annual basis the Windhoek and surrounding area, in zone 2 recorded the lowest inflation rate at 0.8% y/y in April, with the northern region recording the highest rate of annual inflation at 2.1%. Inflation in zone 3 (Eastern, Southern and Western regions) slowed to 2.2% y/y.

Namibian annual inflation at 1.6% in April shows that inflationary pressure remains extremely subdued, and is currently at levels last seen in 2005. As explained last month, the lockdown imposed by the government severely hampered economic activity in April, putting both businesses and consumers under severe financial pressure which results in consumers simply not being able to afford higher prices on goods and services. While the lockdown has now been mostly lifted, we expect inflation to remain subdued in the short to medium term. IJG’s inflation model forecasts an average inflation rate of 1.9% y/y in 2020 and 3.7% y/y in 2021.

New Vehicle Sales – April 2020

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A total of 50 new vehicles were sold in April, a 93.4% m/m contraction from the 759 vehicles sold in March. Year-to-date, 2,279 vehicles have been sold of which 965 were passenger vehicles, 1,149 light commercial vehicles, and 165 medium and heavy commercial vehicles. On a twelve-month cumulative basis, vehicle sales continued to dwindle with a total of 9,389 new vehicles sold as at April 2020, down 17.7% from the 11,405 sold over the comparable period a year ago. The dismal new vehicle sales figures were expected seeing as that the Khomas and Erongo regions were on lockdown for the entire month, and the rest of the country was on lockdown for two weeks.

Only 9 new passenger vehicles were sold during April, representing a contraction of 97.2% m/m from the 318 passenger vehicles sold in March. On a year-on-year basis, April new passenger vehicle sales were 98.1% lower than the 464 vehicles sold a year ago. Year-to-date, passenger vehicle sales rose to 965. On a rolling 12-month basis, passenger vehicle sales are at their lowest level since May 2010, highlighting the severity of the slowdown in sales.

Commercial vehicles sales reflect a similar picture, declining by 23.1% year-to-date and 16.1% y/y on a rolling 12-month basis. A total of 41 new commercial vehicles were sold in April, representing a decrease of 90.7% m/m and 91.1% y/y. 39 Light commercial vehicles, 2 medium commercial vehicles, and no heavy and extra heavy commercial vehicles were sold during the month. On a twelve-month cumulative basis, light commercial vehicle sales dropped 19.5% y/y, while medium commercial vehicle sales rose 15.6% y/y, and heavy commercial vehicle sales increased by 14.2% y/y.

Toyota was one of three manufacturers managing to sell passenger vehicles during April and continues to lead the market in terms of year-to-date market share of new passenger vehicles sold. Toyota claimed 31.3% of the market, followed closely by Volkswagen with 28.7% of the market. They were followed by Kia and Hyundai with 7.2% and 5.7% of the market respectively, while the rest of the passenger vehicle market was shared by several other competitors.

Toyota also remained the leader in the light commercial vehicle space with a 58.7% market share, with Nissan in second place with 15.8% market share. Ford and Isuzu claimed 8.6% and 5.4%, respectively, of the number of light commercial vehicles sold thus far in 2020. Mercedes leads the medium commercial vehicle segment with 30.0% of sales year-to-date. Mercedes was also number one in the heavy and extra-heavy commercial vehicle segment with 21.9% of the market share year-to-date.

The Bottom Line

New vehicle sales have been under pressure in recent years as domestic economic conditions have generally been tough. The lockdowns of first the Khomas and Erongo regions, followed by the lockdown of the entire country, has brought vehicle sales to a complete standstill in the last two months. While we do believe that vehicle sales will higher in the coming months than in April, it is unlikely that it will return to the levels seen in recent months and years. Both business and consumer confidence are extremely low at the moment as a result of the impact of the lockdowns. It is unlikely that many businesses and consumers will be in a financial position to purchase new vehicles for the rest of the year.