Namibia Business Index Slows to 146,3 Points in August

THE IJG Business Climate Index slowed in August following a decline in building plans completed, company registrations and vehicles sales, all of which contracted off an abnormally high base.

Following a 3,6 point contraction, the index now stands at 146,3 index points, below the average level so far this year but well above the long term mean.

The Institute of Public Policy Research (IPPR) said in a report yesterday contraction witnessed in August means the three-month moving average trend line has flattened off for the first time since April.

“Nevertheless, the expectation remains for the index to remain buoyant as the year closes out and, barring major macro-economic surprises going forward, we could see further record highs on the index before the end of the year,” the IPPR said.

The report said while notable declines were witnessed in the index sub-components of building plans completed, company registrations and vehicle sales, minor declines were also seen in the categories of fish prices, diamond prices and the interest rate index.

The interest rate index declined on the back of an interest rate hike by the Bank of Namibia.

“This increase in interest rates is deemed negative for businesses, however necessary it may be for macro-economic stability, and thus is recorded as a negative in the Business Climate Monitor,” the report said.

g expansion was seen in the categories of meat and metal prices, the most important categories in the index given their relative weightings in Namibia’s export basket.

Additionally, the oil price declined, further improving the outlook for the business climate as lower oil prices are expected to be passed through to consumers through fuel prices over the coming three to six months.

“The downturn during August is not viewed as cause for concern, but rather the inevitable outcome of the abnormally high base set in the index by its components over recent months. As such, while a downturn was witnessed in the IJG Business Climate Index in August, there is no major change in the business climate on the ground in the country, and IPPR remains of the view that the outlook for the country and businesses continues to be positive,” the report said.

Source : The Namibian