3-10 October 2024 Weekly Economics Wrap: Domestic Activity Declines, South Africa’s LPG Boom, and Global Financial Developments

Economic activity in Namibia showed signs of a slowdown in the second quarter of 2024, with business registrations declining by 34% compared to the same period last year. According to the Bank of Namibia, both close corporations and private companies experienced downturns, with close corporations dropping by 37.7% and private companies by 8.4% year-on-year.

In the realm of domestic debt, Namibia’s total reached N$123.51 billion by the end of September, reflecting a month-on-month increase of N$2.04 billion. Research firm Simonis Storm attributed this growth primarily to the issuance of fixed-rate bonds (GCs), which accounted for 63% of the increase, with N$1.27 billion issued.

South African Developments

In South Africa, the rand made modest gains against the dollar on Friday, appreciating approximately 0.3% to 17.465 despite a robust U.S. jobs report. However, the rand has experienced about a 2% decline since the beginning of the week amid rising tensions in the Middle East.

The liquefied petroleum gas (LPG) sector in South Africa is poised for growth, driven by new distribution hubs and a shift from traditional energy sources. With Eskom planning a 36% hike in electricity tariffs next year, industry executives highlight the increasing demand for LPG as a more affordable alternative.

African Economic Highlights

In Nigeria, the central bank is set to introduce an automated system for foreign currency trades in December, transitioning from the current over-the-counter system. This change aims to enhance transparency and liquidity in the currency market, allowing for a more market-driven exchange rate accessible to the public.

Meanwhile, Kenya anticipates additional financial support from the International Monetary Fund (IMF) before the end of the year. The country’s central bank governor announced ongoing discussions with the IMF regarding the merging of the seventh and eighth reviews of its $3.6 billion support programme, with a staff-level agreement for the seventh review reached in June.

International Economic Insights

On the international stage, the German government has revised its economic forecast, now expecting a contraction of 0.2% in 2024, down from an earlier prediction of 0.3% growth. This adjustment is attributed to an industrial slowdown, declining exports, and rising energy costs, marking the second consecutive year of economic contraction for the country.

In currency markets, the dollar remained stable, providing some relief to the yen and other major currencies after its recent rise to a seven-week high. Conversely, the New Zealand dollar fell to $0.6096, its lowest level since August 19, following a 50 basis point interest rate cut by the Reserve Bank of New Zealand.

Lastly, Warren Buffett’s Berkshire Hathaway Inc. has made headlines by selling a multi-tranche bond worth US$1.89 billion. This move has sparked speculation about the firm’s plans to increase its exposure to Japanese assets. The deal, which is Berkshire’s largest yen-denominated bond issuance since 2019, included seven maturities ranging from three to 30 years, most of which offered higher premiums than previous sales.