Category Archives: Economic Research

Economic Research

NCPI – November 2019

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The Namibian annual inflation rate slowed for a third consecutive month, moderating to 2.5% y/y in November, hitting the lowest levels since August 2005. Prices increased by 0.1% m/m. On an annual basis prices in four of the twelve basket categories rose at a quicker rate in November than in October, two categories recorded increases consistent with the prior month, while the annual rate of price increases in six categories slowed during the month of November. Prices for goods rose by 1.7% y/y while prices for services rose 3.4% y/y.

The housing and utilities category was the largest contributor to annual inflation in November due to its large weighting in the basket, accounting for 0.53 percentage points of the total 2.5% annual inflation rate. Price inflation for this category once again came in at 1.9% y/y but remained relatively flat month-on-month. The regular maintenance and repair of dwellings subcategory recorded an increase in prices of 5.0% y/y, which is a higher rate of increase than the 2.5% y/y registered the previous month. Month-on-month, prices in this subcategory increased by 2.2%. Prices in the electricity, gas and other fuels subcategory declined by 0.8% y/y. Annual inflation for rental payments remained unchanged at 2.3% y/y in November.

Food & non-alcoholic beverages, was the second largest contributor to annual inflation, accounting for 0.51 percentage points of the 2.5% annual inflation rate. Prices in this category increased by 0.4% m/m and 2.9% y/y. Prices in eleven of the thirteen sub-categories recorded increases on an annual basis, with the largest increases being observed in the prices of fruits and vegetables, recording price increases of 14.0% y/y and 14.4% y/y respectively. Meat prices decreased by 0.3% y/y, compared to the 1.9% y/y increase recorded in the previous month. Due to the ongoing drought there has been a large-scale slaughtering of cattle. This has reduced the number of livestock in the country and going forward meat prices will likely increase as restocking of farms will cause upward pressure on prices.

The education basket category recorded inflation of 12.0% y/y, with the cost of pre-primary and primary education growing at a rate of 12.6% y/y, while secondary- and tertiary education recorded price increases of 11.0% y/y and 12.7% y/y, respectively. All three subcategories printed no price increases on a month-on-month basis.

According to the zonal data, prices rose 0.5% m/m in the northern regions, but printed flat in the rest of the country on a monthly basis. On an annual basis, the Windhoek and surrounding area, recorded the lowest inflation rate at 2.0% in August, with the mixed zone 3 covering the south, east and west of the country recording the highest rate of inflation at 3.6% y/y. Inflation in the northern region of the country slowed to 2.1% y/y.

The Namibian annual inflation rate surprised further to the downside, slowing to 2.5% in November, and is trending well below South Africa’s November inflation figure of 3.6%. Inflationary pressure in Namibia remains low as gloomy domestic economic conditions translates to muted demand for both goods and services. IJG’s inflation model forecasts an average inflation rate of 3.8% y/y in 2019 and 3.5% y/y in 2020. The largest upside risk to this forecast is higher food costs as the drought affects local food production.

Building Plans – October 2019

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A total of 214 building plans were approved by the City of Windhoek in October. This is a 5.9% increase in the number of plans approved on a monthly basis when compared to the 202 building plans approved in September. The approvals were valued at N$134.7 million, a decrease of N$298 million or 68.8% compared to last month. The number of completions for the month of October stood at 244, valued at N$109.9 million. The year-to-date value of approved building plans currently stands at N$1.70 billion, 1.8% lower than at the end of October 2018. On a twelve-month cumulative basis 1,947 building plans worth approximately N$1.81 billion have been approved, a decrease of 14.5% y/y in number and a contraction of 9.8% in value terms over the prior 12-month period.

The largest portion of building plan approvals was once again made up of additions to properties. 179 additions to properties were approved in October, an 11.9% increase over the number of additions approved in September. Year-to-date 1,400 additions to properties have been approved with a cumulative value of N$656.5 million, a decline of 22.8% y/y in terms of value compared to the same period in 2018. Completed additions amounted to 215, valued at N$82.3 million, an increase of 4.4%% y/y in number but a contraction of 3.9% y/y in value. Year-to-date 1,028 additions have been completed to a value of N$477.3 million, a drop of 49.5% y/y in number and 31.7% y/y in value.

New residential units were the second largest contributor to the number of building plans approved with 31 approvals registered in October, compared to 35 in September. In value terms, N$47.8 million worth of residential units were approved in October, increases of 9.6% m/m and 8.4% y/y. 316 New residential units valued at N$489.8m were approved in the first ten months of 2019, 28.8% y/y less in number and 2.9% y/y less in value than during the corresponding period in 2018. 29 Residential units valued at N$27.6 million were completed in October bringing the year-to-date number to 254, up 323.3% y/y, and value to N$350.8 million, up 243.2% y/y.

Commercial and industrial building plans approved in October amounted to 4 units, worth N$9.6 million. The number of approvals for commercial and industrial properties has been languishing in single digit territory since September 2016 and has an average approval rate of less than 4 approvals per month over the last 12 months. On a 12-month cumulative basis, the number of commercial and industrial approvals has decreased by 10.4% y/y in October to 43 units, worth approximately N$557.7 million, an increase of 39.2% in value terms over the prior 12-month period. No commercial and industrial building plans were recorded as completed in October.

During the last 12 months, 1,947 building plans have been approved, decreasing by 14.5% y/y. These approvals were worth a combined N$1.81 billion, a decrease in value of 9.8% y/y. The number of building plans approved, on a cumulative 12-month basis, continued to contract over the last four months. The overall decrease in both number and value of cumulative plans approved is concerning as, even in nominal terms, this indicates a continuing decrease in construction activity in the capital. Low consumer and business confidence means that growth in construction activity will likely remain subdued over the short- to medium-term.

New Vehicle Sales – November 2019

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A total of 875 new vehicles were sold in November, a 9.9% m/m decrease from the 971 vehicles sold in October. Year-to-date 9,687 new vehicles have been sold, of which 4,236 were passenger vehicles, 4,766 were light commercial vehicles, and 685 were medium and heavy commercial vehicles. On a twelve-month cumulative basis, new vehicle sales continued its downward trend. 10,417 new vehicles were sold over the last twelve months, a 13.2% contraction from the previous twelve months.

347 new passenger vehicles were sold in November, contracting by 2.3 % m/m and 14.3% y/y. Year-to-date new passenger vehicle sales rose to 4,236 units, down 11.5% when compared to the year-to-date figure recorded in November 2018. Twelve-month cumulative passenger vehicle sales fell 11.8% y/y as the number of passenger vehicles sold continued to decline.

A total of 528 new commercial vehicles were sold in November, decreasing by 14.3% m/m and 33.3% y/y. Of the 528 new commercial vehicles sold in November, 467 were classified as light commercial vehicles, 29 as medium commercial vehicles and 32 as heavy or extra heavy commercial vehicles. 440 heavy vehicles were sold year-to-date, the highest sales figure for the period since November 2016. On a twelve-month cumulative basis light commercial vehicle sales dropped 16.6% y/y, while medium commercial vehicle sales and heavy commercial vehicles rose 6.2% y/y and 8.4% y/y, respectively.  For the seventh consecutive month, there has been an increase in the sale of heavy commercial vehicles on a twelve-month cumulative year-on-year basis. The steady increase in this category indicates improved demand for durable goods by businesses.

Volkswagen continues to lead the passenger vehicle sales segment with 30.4% of the segment sales year-to-date. Toyota remained in second place with 28.9% of the market-share as at the end of November. Kia, Mercedes, Hyundai and Ford each command around 5% of the market in the passenger vehicles segment, leaving the remaining 20.0% of the market to other brands.

Toyota retained a strong year-to-date market share of 57.7% in the light commercial vehicle segment and remains the market leader in the segment. Nissan remains in second position in the segment with 12.6% of the market, while Ford makes up third place with 8.6% of the year-to-date sales. Hino leads the medium commercial vehicle segment with 38.4% of sales year-to-date, while Scania was number one in the heavy- and extra-heavy commercial vehicle segment with 37.0% of the market share year-to-date.

The Bottom Line

Vehicle sales remain under pressure, with the year-to-date new vehicle sales in 2019 currently below 2010 levels, and the total new vehicle sales for the last 12 months down 13.2% from the same period in 2018. Both new commercial and new passenger vehicle sales are at their lowest year-to-date levels since 2009. However there has been an improvement in the demand for new medium and heavy commercial vehicles in 2019. This improvement has come off a very low base, but it suggests that the sectors of the economy that rely on these categories of vehicles may have turned the corner or bottomed out. However, we continue to expect business and consumer confidence to remain low and thus expect subdued demand for new vehicles going forward.