WINDHOEK – The IJG Business Climate Index reversed in January after posting three consecutive all-time highs in October, November and December. Following this reversal, the index, which is produced by the Institute for Public Policy Research (IPPR), now stands at 161.3 points, from 167.2 in the preceding month.
According to the IJG’s monthly report, the decline was driven by a number of factors, notably a weakening Euro vis-à-vis the rand and other currencies, falling mineral prices, and a decline in vehicle sales and building plans approved and completed.
The report states that the Euro continued to weaken through January, as divergent economic growth and recovery drove the relative attractiveness of the US and some emerging market economies over Europe, resulting in currency flows away from Europe to these jurisdictions.
In addition, more than six years after a similar initiative was launched in the US, the European Central Bank in January announced a quantitative easing programme, which will begin to print money during March and should drive increased inflation in the bloc and weaken the Euro further.
The metal price sub-index declined through February as the copper price slid close to 13 percent on the back of weakening demand for the commodity from China, as growth continues to slow from historic double-digit levels.
On the bright side, however, the uranium price recovered to U$37/lb from U$35/lb in the previous month, delivering some, albeit small, respite for embattled uranium miners in the country.
Meanwhile, seasonal factors drove the decline in building plans approved and completed, as reduced staff and builders’ holidays saw a decline in building plans processed and construction activity through much of December and January. Similarly, vehicle sales declined as demand slowed through he December-January holiday period.
“Following expansion in the IJG Business Climate Index, the index reversed in January, driven by seasonal and global factors. Much of the recent upward trend in the index was driven by the oil price, which continued to decline through January, however at a slower rate than preceding months. On a monthly basis, all of the monitored indices and indicators contracted, with the same being seen on a quarterly basis, excluding the consumption index, which expanded,” states the report.