Unpacking the second quarter
BoN dissects GDP figures
The latest Quarterly Bulletin of the Bank of Namibia showcases interesting aspects of the economy and a detailed breakdown of trends.
The performance of the domestic economy continued to be positive, albeit with a slowdown observed during the second quarter of 2023.
Year-on-year (y/y), the economy registered a growth rate of 3.7% in the second quarter - a decline from the 8.5% growth recorded in the same quarter of 2022.
The second quarter of 2023 witnessed a noteworthy surge in new business registrations, signifying a rosier outlook for the economy.
Y/y and quarter-on-quarter (q/q) comparisons both showed substantial increases in registrations. The registration of new businesses serves as a leading indicator for future activity in the economy.
Specifically, the total count of new business registrations, serving as an indicator of business confidence, exhibited a y/y growth of 6.2%.
This upswing was particularly prominent within the private company, or (Pty) Ltd category, which experienced a y/y surge of 34.1%, according to the Bank of Namibia (BoN).
On the other hand, the close corporation category, constituting approximately 90% of the overall new business registrations, showed a modest y/y increase of 3.5% during the second quarter.
Furthermore, when examining quarterly data, there was a substantial 7.4% increase in the total number of new business registrations throughout the second quarter. Notably, when considering seasonally adjusted figures, the increase surged even higher, reaching 14.3% during the same period, BoN data shows.
Employment
In the second quarter, there were contrasting trends in employment figures between the wholesale and retail trade sector and the manufacturing sector when compared y/y.
Employment in the wholesale and retail trade sector registered a modest increase of 1.2%, while in the manufacturing sector, it witnessed a decline of 1.4% during the same period.
The annual uptick in employment within the wholesale and retail trade sector was evident across the major subsectors under scrutiny, with noteworthy growth observed in both wholesale and furniture trade, according to the BoN.
In contrast, the manufacturing sector experienced a reduction in employment, particularly noticeable in subsectors such as beverages, food products and basic metals.
On a quarterly basis, there was an overall positive trend in employment for both the wholesale and retail trade, as well as the manufacturing sectors, with respective increases of 4.7% and 0.6%.
Wage bill
In the second quarter, there were notable increases in both the nominal wage bill and average wages within the wholesale and retail trade sector when compared y/y.
Over the course of the year, the nominal wage bill and average wages in this sector experienced substantial growth, with a 10.9% and 13.9% increase, respectively.
“This was in line with the continued increase in the real turnover in the sector during the quarter under review, which suggests that demand for consumer goods is steadily rising,” the BoN said.
On a quarterly basis, however, the nominal wage bill exhibited a modest average decline of 1.8%, while average wages showed an increase of 4.9%.
Similarly, in the manufacturing sector during the second quarter, there were y/y increases in both the nominal wage bill and average wages. Specifically, the nominal wage bill and average wages in the manufacturing sector grew by 3.9% and 5.4%, respectively.
This annual rise in the nominal wage bill was generally observed across the primary subsectors, with the exception of the food and non-metallic minerals subsectors, according to the BoN.
On a quarterly basis, the nominal wage bill in manufacturing increased by 3.8%, while average wages decreased by 3.2%.
Labour costs
In the second quarter, there was a y/y increase in unit labour costs within the manufacturing sector.
The total unit labour costs for this sector saw a notable 16.6% y/y increase, although there was a slight decrease of 0.6% on a q/q basis.
The BoN attributed the annual rise in unit labour costs within the sector primarily to a decrease in output per worker and an increase in average wages across most subsectors.
“The increase in the total unit labour costs for the manufacturing sector is unfavourable for the competitiveness of Namibia’s products in the export market,” the BoN cautioned.
Manufacturing
During the second quarter, significant improvements in key production indicators were evident within the manufacturing sector when compared to the previous year.
Notable advancements were observed in the production of prominent manufactured products, including blister copper, cement, and soft drinks. These product categories witnessed y/y growth rates of 73.3%, 9.3% and 18.9%, respectively.
The surge in soft drinks production can be primarily attributed to a steadily recovering demand as economic activity gradually rebounds from the pandemic's impact, according to the BoN.
In contrast, the increase in blister copper throughput was largely influenced by base effects, as the period under review experienced fewer significant plant breakdowns compared to the corresponding period in 2022. Additionally, the upswing in cement production was mainly a result of improved local demand, supported by consistent export activity, partly driven by increased government construction projects.
However, the manufacturing sector saw weak performances in diamond processing and beer production, with declines of 39.3% and 23.1%, respectively.
The drop in diamond processing can be attributed to a slowdown in consumer demand, while the decline in beer production was influenced by operational issues and a general reduction in local demand amid the global economic downturn and inflationary pressures, the BoN said.
Wholesale and retail trade
In the second quarter, the real turnover in the wholesale and retail trade sector experienced a significant y/y increase.
This growth was quite substantial, with a 12.5% rise during the second quarter of 2023, in stark contrast to a 0.3% decline recorded during the same quarter in 2022.
Concurrently, the nominal turnover in the wholesale and retail trade sector remained robust, marking a 16.4% increase over the same period.
“This implies that the real turnover for the wholesale and retail trade sector increased, despite the adverse effect of inflation on consumers’ purchasing power,” the BoN said.
The upsurge in wholesale and retail trade sector turnover was particularly pronounced in the wholesale, supermarket and vehicle trade segments.
There was a substantial y/y increase of 30.3% in the number of new vehicles sold, encompassing both passenger and commercial vehicles.
The surge in passenger vehicle sales was primarily driven by the car-rental industry's response to the gradual recovery of tourism activity following the easing of pandemic-related restrictions, according to the BoN.
Conversely, the sales of second-hand vehicles experienced a slight year-on-year decrease of 1.2%.
Tourism
Tourism activity, as indicated by the total number of airport passenger arrivals, saw a significant y/y increase, reflecting the growing momentum in the sector.
During the second quarter, the total tourist arrivals surged by an impressive 33.9%, reaching a total of 105 307 visitors, compared to the same period in 2022.
“The recovery was a reflection of the increased growth appetite in the industry since the removal of all travel restrictions. Furthermore, Namibia remains one of the most attractive tourist destinations in the region and on the continent,” the BoN said.
The annual growth in airport passenger arrivals encompassed both international and regional arrivals. However, it's worth noting that while there has been a considerable recovery, the total arrivals have not yet fully reached pre-pandemic levels, the BoN noted.
They remained 12.2% below the levels observed in the second quarter of 2019, which represents the pre-pandemic period. Nonetheless, this figure represents a notable improvement from the preceding quarter when arrivals were 37% lower, indicating a positive trajectory towards surpassing pre-pandemic levels.
The number of international arrivals experienced a y/y increase of 47%, rising from 36 751 visitors during the second quarter of 2022. Regional arrivals also saw a substantial upswing, with a 22.4% increase from 41 891 visitors during the second quarter of 2022.
Transport
During the second quarter, the transport sector experienced heightened activity, primarily fuelled by increased road cargo volumes.
The overall cargo index saw a notable y/y rise of 8.2%. This increase in the total cargo index was predominantly propelled by a robust 14.5% growth in road cargo, complemented by a 3.6% increase in sea cargo. However, rail cargo saw a decline of 9.9% y/y during the same period.
The upswings in road and sea cargo were largely attributable to heightened imports of both industrial and consumer goods.
“The increases in road and sea cargo were driven by the imports of industrial and consumer goods, as economic activity continued to normalise from the effect of the pandemic,” the BoN said.
Fuel consumption
Total fuel consumption witnessed a y/y increase during the second quarter.
The total fuel consumption rose by 5.6% y/y, reaching a total of 278.9 million litres during the period.
This increase was primarily driven by a surge in diesel consumption, which saw an 8.6% rise, while petrol consumption experienced a slight 1% decrease y/y, according to the BoN.
The increase in diesel consumption can be attributed in part to the growing economic activities, as diesel is utilised in various applications, including water pumping, power generation, and as a fuel for vehicles.
Communication
During the second quarter, activity within the communication sub-sector exhibited y/y growth. This activity, represented by the usage of minutes and internet data traffic, saw notable increases.
Specifically, both the total number of minutes used and the total internet traffic data in gigabytes (GB) showed y/y increases of 2.8% and 10.7%, respectively.
“The increase in these activities were mainly due to increased demand for internet data, as economic agents and individual consumers continue to venture into new applications and/or facilities that involve additional internet data usage,” the BoN said.
Electricity
Local electricity generation experienced a remarkable y/y increase, primarily attributed to heightened water inflow into the Ruacana hydro-power plant.
In the second quarter, local electricity generation surged significantly, marking a substantial 33.8% y/y growth.
This surge was, in part, the result of improved water inflow into the Ruacana hydro-power plant during the 2022/23 rainy season, leading to a notable reduction in electricity imports, down by 12.1% y/y.
Additionally, the consumption of electricity saw a y/y increase of 17.1% during the second quarter. This rise was indicative of heightened demand, primarily driven by the mining sector, the BoN noted.
Year-on-year (y/y), the economy registered a growth rate of 3.7% in the second quarter - a decline from the 8.5% growth recorded in the same quarter of 2022.
The second quarter of 2023 witnessed a noteworthy surge in new business registrations, signifying a rosier outlook for the economy.
Y/y and quarter-on-quarter (q/q) comparisons both showed substantial increases in registrations. The registration of new businesses serves as a leading indicator for future activity in the economy.
Specifically, the total count of new business registrations, serving as an indicator of business confidence, exhibited a y/y growth of 6.2%.
This upswing was particularly prominent within the private company, or (Pty) Ltd category, which experienced a y/y surge of 34.1%, according to the Bank of Namibia (BoN).
On the other hand, the close corporation category, constituting approximately 90% of the overall new business registrations, showed a modest y/y increase of 3.5% during the second quarter.
Furthermore, when examining quarterly data, there was a substantial 7.4% increase in the total number of new business registrations throughout the second quarter. Notably, when considering seasonally adjusted figures, the increase surged even higher, reaching 14.3% during the same period, BoN data shows.
Employment
In the second quarter, there were contrasting trends in employment figures between the wholesale and retail trade sector and the manufacturing sector when compared y/y.
Employment in the wholesale and retail trade sector registered a modest increase of 1.2%, while in the manufacturing sector, it witnessed a decline of 1.4% during the same period.
The annual uptick in employment within the wholesale and retail trade sector was evident across the major subsectors under scrutiny, with noteworthy growth observed in both wholesale and furniture trade, according to the BoN.
In contrast, the manufacturing sector experienced a reduction in employment, particularly noticeable in subsectors such as beverages, food products and basic metals.
On a quarterly basis, there was an overall positive trend in employment for both the wholesale and retail trade, as well as the manufacturing sectors, with respective increases of 4.7% and 0.6%.
Wage bill
In the second quarter, there were notable increases in both the nominal wage bill and average wages within the wholesale and retail trade sector when compared y/y.
Over the course of the year, the nominal wage bill and average wages in this sector experienced substantial growth, with a 10.9% and 13.9% increase, respectively.
“This was in line with the continued increase in the real turnover in the sector during the quarter under review, which suggests that demand for consumer goods is steadily rising,” the BoN said.
On a quarterly basis, however, the nominal wage bill exhibited a modest average decline of 1.8%, while average wages showed an increase of 4.9%.
Similarly, in the manufacturing sector during the second quarter, there were y/y increases in both the nominal wage bill and average wages. Specifically, the nominal wage bill and average wages in the manufacturing sector grew by 3.9% and 5.4%, respectively.
This annual rise in the nominal wage bill was generally observed across the primary subsectors, with the exception of the food and non-metallic minerals subsectors, according to the BoN.
On a quarterly basis, the nominal wage bill in manufacturing increased by 3.8%, while average wages decreased by 3.2%.
Labour costs
In the second quarter, there was a y/y increase in unit labour costs within the manufacturing sector.
The total unit labour costs for this sector saw a notable 16.6% y/y increase, although there was a slight decrease of 0.6% on a q/q basis.
The BoN attributed the annual rise in unit labour costs within the sector primarily to a decrease in output per worker and an increase in average wages across most subsectors.
“The increase in the total unit labour costs for the manufacturing sector is unfavourable for the competitiveness of Namibia’s products in the export market,” the BoN cautioned.
Manufacturing
During the second quarter, significant improvements in key production indicators were evident within the manufacturing sector when compared to the previous year.
Notable advancements were observed in the production of prominent manufactured products, including blister copper, cement, and soft drinks. These product categories witnessed y/y growth rates of 73.3%, 9.3% and 18.9%, respectively.
The surge in soft drinks production can be primarily attributed to a steadily recovering demand as economic activity gradually rebounds from the pandemic's impact, according to the BoN.
In contrast, the increase in blister copper throughput was largely influenced by base effects, as the period under review experienced fewer significant plant breakdowns compared to the corresponding period in 2022. Additionally, the upswing in cement production was mainly a result of improved local demand, supported by consistent export activity, partly driven by increased government construction projects.
However, the manufacturing sector saw weak performances in diamond processing and beer production, with declines of 39.3% and 23.1%, respectively.
The drop in diamond processing can be attributed to a slowdown in consumer demand, while the decline in beer production was influenced by operational issues and a general reduction in local demand amid the global economic downturn and inflationary pressures, the BoN said.
Wholesale and retail trade
In the second quarter, the real turnover in the wholesale and retail trade sector experienced a significant y/y increase.
This growth was quite substantial, with a 12.5% rise during the second quarter of 2023, in stark contrast to a 0.3% decline recorded during the same quarter in 2022.
Concurrently, the nominal turnover in the wholesale and retail trade sector remained robust, marking a 16.4% increase over the same period.
“This implies that the real turnover for the wholesale and retail trade sector increased, despite the adverse effect of inflation on consumers’ purchasing power,” the BoN said.
The upsurge in wholesale and retail trade sector turnover was particularly pronounced in the wholesale, supermarket and vehicle trade segments.
There was a substantial y/y increase of 30.3% in the number of new vehicles sold, encompassing both passenger and commercial vehicles.
The surge in passenger vehicle sales was primarily driven by the car-rental industry's response to the gradual recovery of tourism activity following the easing of pandemic-related restrictions, according to the BoN.
Conversely, the sales of second-hand vehicles experienced a slight year-on-year decrease of 1.2%.
Tourism
Tourism activity, as indicated by the total number of airport passenger arrivals, saw a significant y/y increase, reflecting the growing momentum in the sector.
During the second quarter, the total tourist arrivals surged by an impressive 33.9%, reaching a total of 105 307 visitors, compared to the same period in 2022.
“The recovery was a reflection of the increased growth appetite in the industry since the removal of all travel restrictions. Furthermore, Namibia remains one of the most attractive tourist destinations in the region and on the continent,” the BoN said.
The annual growth in airport passenger arrivals encompassed both international and regional arrivals. However, it's worth noting that while there has been a considerable recovery, the total arrivals have not yet fully reached pre-pandemic levels, the BoN noted.
They remained 12.2% below the levels observed in the second quarter of 2019, which represents the pre-pandemic period. Nonetheless, this figure represents a notable improvement from the preceding quarter when arrivals were 37% lower, indicating a positive trajectory towards surpassing pre-pandemic levels.
The number of international arrivals experienced a y/y increase of 47%, rising from 36 751 visitors during the second quarter of 2022. Regional arrivals also saw a substantial upswing, with a 22.4% increase from 41 891 visitors during the second quarter of 2022.
Transport
During the second quarter, the transport sector experienced heightened activity, primarily fuelled by increased road cargo volumes.
The overall cargo index saw a notable y/y rise of 8.2%. This increase in the total cargo index was predominantly propelled by a robust 14.5% growth in road cargo, complemented by a 3.6% increase in sea cargo. However, rail cargo saw a decline of 9.9% y/y during the same period.
The upswings in road and sea cargo were largely attributable to heightened imports of both industrial and consumer goods.
“The increases in road and sea cargo were driven by the imports of industrial and consumer goods, as economic activity continued to normalise from the effect of the pandemic,” the BoN said.
Fuel consumption
Total fuel consumption witnessed a y/y increase during the second quarter.
The total fuel consumption rose by 5.6% y/y, reaching a total of 278.9 million litres during the period.
This increase was primarily driven by a surge in diesel consumption, which saw an 8.6% rise, while petrol consumption experienced a slight 1% decrease y/y, according to the BoN.
The increase in diesel consumption can be attributed in part to the growing economic activities, as diesel is utilised in various applications, including water pumping, power generation, and as a fuel for vehicles.
Communication
During the second quarter, activity within the communication sub-sector exhibited y/y growth. This activity, represented by the usage of minutes and internet data traffic, saw notable increases.
Specifically, both the total number of minutes used and the total internet traffic data in gigabytes (GB) showed y/y increases of 2.8% and 10.7%, respectively.
“The increase in these activities were mainly due to increased demand for internet data, as economic agents and individual consumers continue to venture into new applications and/or facilities that involve additional internet data usage,” the BoN said.
Electricity
Local electricity generation experienced a remarkable y/y increase, primarily attributed to heightened water inflow into the Ruacana hydro-power plant.
In the second quarter, local electricity generation surged significantly, marking a substantial 33.8% y/y growth.
This surge was, in part, the result of improved water inflow into the Ruacana hydro-power plant during the 2022/23 rainy season, leading to a notable reduction in electricity imports, down by 12.1% y/y.
Additionally, the consumption of electricity saw a y/y increase of 17.1% during the second quarter. This rise was indicative of heightened demand, primarily driven by the mining sector, the BoN noted.
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