WINDHOEK – The IJG Business Climate Index, produced by the Institute for Public Policy Research (IPPR), spiked to a new all-time high in October as predicted in earlier monitors. Following this strong increase, the index now stands at 163.1 points, up 9.0 percent month on month and 10.5 percent year on year. This index level is an all-time high, and a notable 6.3 percent above the previous high of 153.5 points.
The strong upward move was driven by a number of factors, notably oil prices, company registrations, building plans and vehicles sales. Through the month the oil price slumped 9.4 percent on the back of a weak global demand and persistently high levels of supply both from OPEC and non-OPEC countries. As such, after a four-year period of prices around or above U$100 per barrel, the October end price fell to US$86 per barrel, the lowest level since November 2010.
This major decline in oil price would be reflected in fuel prices in Namibia in the next two months, while food prices would also see a decline within the next 12 to 18 months as lower input costs are passed through to sale prices.
The Index saw vehicles sales surpass the 2 000 mark for the first time, with 2 092 vehicles sold from local dealers through the month. Nearly 60 percent of the sales were of commercial vehicles, many of which were bought by the three mines currently under construction in the country.
In addition, government spent heavily on vehicles in the lead-up to the November elections. However, much of this sales volume is attributable to household vehicle purchases, reflecting the exceptional strength of consumers at this current point in time.
On the building plan front, the sub-index jumped over 90 percent during the month largely due to base effects, while company registrations expanded to 1,888 new registrations, up from 1,755 in the preceding month. This increase in registrations is partially attributable to the new online registration system and is illustrative of thriving business activity in the country. Few index components saw declines during the month in question, and all witnessed declines were minor in magnitude.
This is broadly in line with the situation witnessed on the ground in the country, where consumer power has ramped up dramatically over the past year, largely due to major FDI flows and accommodative macroeconomic policy.
By Staff Reporter