Business Climate Index Drops in February

The IJG Business Climate Index dropped by 0,9 index points in February 2014, following an expansion of 4,7 points in the preceding month.

The Institute of Public Policy Research (IPPR) said yesterday that the overall index now stands at 147,9 points. The decline was on account of slight downward moves in the fish, meat and oil price indices, despite increases in most of the other components of the overall index, the IPPR said in a report.

Additionally, increasing inflation, to 5,2% in February, contributed to the overall decline in the index.

“Of the positive sub-components of the overall index, most notable was the vehicle sales index, which expanded by 36,1 points, following record vehicle sale levels in the month of February.

The IPPR noted that building plans and private sector credit extension continue to increase, which it said is more or less in line with nominal growth and marginally above inflation levels in the country.

Going forward, the IPPR said should an interest rate hiking cycle start in the country, it expects to see credit extension starting to slow, as could building plans completed, and vehicles sales.

The consumption and export indices also declined between January and February, with the investment index expanding by 3,5 points. A sizable increase in the leading indicator, which extended by 36 points to 224 points in February, is a very positive sign for the future, the report said.

The IPPR said this indicator suggests that the business climate will continue to improve over the coming months, broadly in line with the current growth outlook for the country.

“All told, the IJG Business Climate Index remained flat in February, albeit at an elevated level following g growth in much of 2013. Once again, the leading indicator has turned extremely positive, suggesting a g and improving business climate going forward,” the report said.

The Business Climate Index is based on 13 broad economic indicators that are likely to impact on the domestic business environment. All indicators have the same weight except for company registration data, which has a significantly lower weight to reduce its volatility on the overall Index. Data is collected on each indicator on a monthly basis.

Source : The Namibian