Indicators suggest 'bottoming out'
Jo-Maré Duddy - Twelve-month cumulative sales of new medium commercial vehicles in October showed positive annual growth for the first time in three years.
Sales for the 12 months ended October 2018 were 0.83% higher than the corresponding period in 2017, IJG Securities says in their analysis of the latest figures.
Sales of new heavy commercial vehicles rose 0.2% on a 12-month cumulative basis, the first time since February 2016.
“The positive growth is negligible at this point, but it is possible that a floor in medium and heavy commercial vehicle sales has been found as companies that have been sweating assets start to replace those vehicles,” IJG says.
Scrutinising Windhoek's latest building stats, IJG says based on a 12-month cumulative basis the number of commercial and industrial plans approved increased by 2.1% year on year in October. 48 plans got the green light, totalling about N$400.6 million. In terms of value, this is 44.3% lower than the corresponding 12-month period in 2017.
New figures released by the Bank of Namibia (BoN) show commercial bank credit extended to business in October was 7.1% more than a year ago.
Not only is this highest annual growth figure for business so far this year, but it also exceeds the year-on-year increase in credit extended to individuals – coming in at 7.0%.
At the end of October, the business sector owed local commercial banks nearly N$38.5 billion, about N$2.5 billion more than a year ago.
The bulk of this – some N$11.4 billion – was mortgage loans. Compared to October 2017, the sector's mortgage loans grew by 0.8%.
Other loans and advances, which includes personal loans and credit – shot up by 30.1% on annual basis. At the end of October, the business sector owed over N$6.1 billion in other loans and advances, about N$1.4 billion more than October 2017.
Overdraft debt increased by 9.8% on annual basis and totalled about N$8.9 billion, some N$793 million more than a year ago.
Business remained cautious of instalment credit, which grew -8.2% year on year. At the end of October, the sector owed nearly N$4.5 billion in instalment. This is about N$397 million less than a year ago.
Commenting on the latest developments, IJG says: “We suspect that Namibia is reaching the bottom of the economic downturn with a number of high frequency indicators such as private sector credit extension (PSCE) pointing to a bottoming out.”
The analysts expect consumer confidence to translate to business confidence as demand picks up. However, “signs of a widespread upswing in economic activity are still missing at present and global headwinds do pose an increased threat to recovery in the Namibian economy,” IJG says.
“The outlook for Namibia remains fragile as a result, but barring any external shocks, or poor policy decisions, the country should start emerging from recession in 2019, although at a sedate pace,” IJG says.