Business outlook remains negative
Continued economic contraction keeps Namibian businesses and citizens in a tight grip, with few signs of a change for the positive.
STAFF REPORTER
The IJG Business Climate Monitor has dropped to a historic low last witnessed in December 2003, the latest data from the Institute for Public Policy Research (IPPR) shows.
After a slight increase seen in July, the IJG Business Climate Monitor fell by 1.08 points in August 2017.
According to the IPPR, at 44.35 points, the index is now at its lowest level since December 2003.
“The index has been below the 50-point level that indicates economic contraction for the entirety of 2017 so far, seeing declines in six of the eight months recorded. Conversely, a recovery of just over two points has been recorded for the leading indicator,” the IPPR said.
Of the 31 indicators measured by the index, 15 expanded in August while 16 contracted.
The mining sector continued to show recoveries as reflected in commodity prices. This was offset by gains the rand had made.
“Although uranium prices saw a slight increase (0.5%), an appreciation in the rand meant that the industry remains under pressure. Copper and gold prices, meanwhile, have seen continued gains (6.6% and 4.1% respectively) which offset the impact of the stronger rand. August saw a significant slowdown in credit extended to the private sector,” the IPPR said.
Consumers responded to an interest-rate cut by opting to pay off their debts.
“The month-on-month contraction seen in credit extended to individuals shows that households preferred to pay back debt despite the lending rate being cut midway through the month,” the IPPR said.
Vehicle sales also continued to contract. “As most vehicles are financed through instalment credit, this contraction feeds through to vehicle sales which fell by around 20% both on a year-on-year and month-on-month basis,” the IPPR said.
The agricultural sector showed strong recovery, surpassing 2016 figures in terms of cattle marketed.
“A new high of 52 789 cattle were marketed in August, with total sales in 2017 so far having already exceeded the total for 2016. Not only is this a concern for remaining domestic stock levels after the drought, but 80% of these were exported live to South Africa without any local downstream value addition taking place in Namibia,” the IPPR said.
The IJG Business Climate Monitor has dropped to a historic low last witnessed in December 2003, the latest data from the Institute for Public Policy Research (IPPR) shows.
After a slight increase seen in July, the IJG Business Climate Monitor fell by 1.08 points in August 2017.
According to the IPPR, at 44.35 points, the index is now at its lowest level since December 2003.
“The index has been below the 50-point level that indicates economic contraction for the entirety of 2017 so far, seeing declines in six of the eight months recorded. Conversely, a recovery of just over two points has been recorded for the leading indicator,” the IPPR said.
Of the 31 indicators measured by the index, 15 expanded in August while 16 contracted.
The mining sector continued to show recoveries as reflected in commodity prices. This was offset by gains the rand had made.
“Although uranium prices saw a slight increase (0.5%), an appreciation in the rand meant that the industry remains under pressure. Copper and gold prices, meanwhile, have seen continued gains (6.6% and 4.1% respectively) which offset the impact of the stronger rand. August saw a significant slowdown in credit extended to the private sector,” the IPPR said.
Consumers responded to an interest-rate cut by opting to pay off their debts.
“The month-on-month contraction seen in credit extended to individuals shows that households preferred to pay back debt despite the lending rate being cut midway through the month,” the IPPR said.
Vehicle sales also continued to contract. “As most vehicles are financed through instalment credit, this contraction feeds through to vehicle sales which fell by around 20% both on a year-on-year and month-on-month basis,” the IPPR said.
The agricultural sector showed strong recovery, surpassing 2016 figures in terms of cattle marketed.
“A new high of 52 789 cattle were marketed in August, with total sales in 2017 so far having already exceeded the total for 2016. Not only is this a concern for remaining domestic stock levels after the drought, but 80% of these were exported live to South Africa without any local downstream value addition taking place in Namibia,” the IPPR said.
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