WINDHOEK – The IJG Business Climate declined 5.5 index points in March, following a decline of 1.0 point in the preceding month.
Having topped out at a record high in November, the index has now been trending downward since then.
The March decline was driven by a number of factors. Firstly, commodity prices for meat, fish and metals declined. The meat price decline is seen to be seasonal, and the price is expected to increase through the latter part of 2014, as supply constraints bite following the drought of 2013. Metal prices continued to soften in March on account of weakening demand for ferrous metals from China, while uranium demand remained weak despite the expectation that Japan would restart its nuclear reactors in Q2 of 2014.
On top of the commodity price declines, the value of building plans completed declined almost five-fold, following a bumper month in February. On the other hand, vehicle sales once again broke record levels in March, increasing to a total of 1 859 vehicles sold, from the previous record of 1 728 vehicles sold in the preceding month.
The investment, export and leading indicators all declined in March, relative to February, but remain up on a quarter-on-quarter basis. The consumption index expanded notably, on account of a 28 percent increase in passenger vehicle sales, as well as strong growth in private sector credit extension. The leading indicator decline was almost entirely on account of a decline in the value of building plans passed, which is not expected to continue in the coming months.
The factors behind the March decline in the index are largely temporary. However, slowing metal prices on account of weaker demand from China remain a concern. At least for now, this decline has been partially offset by a relatively weak Namibia Dollar against the US Dollar. Going forward, uranium prices are expected to increase, while ferrous metal prices are expected to stabilise, thus making the outlook more positive.
By Staff Reporter