Martin Endjala
Namibia’s trade deficit swelled by 17 percent, marking its most significant gap since May 2022. While exports fell by 5.8 percent, imports rose by 2.2 percent in August 2023. The export bill stood at N$7.4 billion, with imports amounting to N$12.3 billion.
This resulted in a trade deficit of N$4.9 billion, up from N$3.7 billion in July 2022.
Angelique Bock, an economist at Simonis Storm Securities, pinpointed the 2023 depreciation of the rand as a significant factor impacting Namibia, especially in terms of imports and inflation dynamics. She said that the rand devalued by 5.8 percent against the US dollar in August 2023, peaking at an exchange rate of R19.17.
This depreciation, Bock emphasized, raised costs for Namibian consumers and businesses importing goods. Being a net importer, Namibia is prone to import-driven inflation where increased import prices boost overall inflation. In her view, the weakening rand has significantly influenced the nation’s inflation patterns.
Bock elaborated, “The weaker rand’s impact on our economy is two-fold. It raises import costs and potential inflation, but it can also boost our export revenues.”
Yet, she believes that Namibia’s economic resilience hinges on the government’s commitment to domestic manufacturing and local agricultural output. She stressed that relying solely on mining and fishing might not offset the country’s long-term trade deficits.
Bock also predicts the trade deficit will keep expanding throughout 2023, although the mining and fishing sectors, buoyed by the depreciating rand, could bolster export revenues. However, she expressed concerns over the global demand for raw materials, especially with looming fears of a potential economic downturn.
With Namibia’s increasing import expenses and the shift to an El Nino weather pattern causing higher temperatures and decreased rainfall, the country faces threats to crop yields. This could likely lead to heightened fresh produce imports due to diminished local production. Skyrocketing oil prices, surpassing the $90 per barrel mark, will further elevate transportation costs, with the faltering rand intensifying these increases.
“To counter the rand’s detrimental effects, I’d advise the Namibian government to focus on policies that foster domestic production, cutting down on imports. Bolstering the competitiveness of our exports is paramount,” Bock commented.
Global trade, meanwhile, is still below historical averages, though the World Trade Organization observed a modest upswing in the second quarter of 2023. Despite Namibia’s consistent trade deficits, its current account balance improved in the third quarter of 2023, boosted by increased exports and decreased imports. The primary income, however, continues to strain the current balance due to negative investment income. In contrast, secondary income flourishes, bolstered by Southern Africa Customs Union receipts.
