The country’s merchandise trade deficit reached N$42 billion in 2024, a significant increase from the N$31 billion recorded in 2023, according to the latest data from the Bank of Namibia (BoN).
The widening trade deficit is primarily attributed to higher import payments, particularly for consumer goods, machinery, and base metals, coupled with a decline in export earnings.
“The deterioration of the merchandise trade deficit is largely driven by increased import payments and lower export earnings, notably from key exports such as diamonds and uranium,” BoN Governor Johannes !Gawaxab said on Wednesday.
He highlighted structural challenges in Namibia’s trade balance, noting that “the trade deficit has been further amplified by increased imports, especially in consumer goods and machinery. This trend underscores the structural challenges Namibia faces in reducing its trade imbalance.”
The central bank governor acknowledged the impact of the deficit on foreign reserves and economic stability.
In response, the Monetary Policy Committee (MPC) lowered the repo rate by 25 basis points to 6.75%.
“The MPC remains cognizant of the margin between policy rates in Namibia and the anchor country, South Africa, and will aim to narrow the policy rate differential over the medium term,” !Gawaxab said.
He further noted that the committee is also mindful of the widening trade deficit, the impact of imminent international debt obligations on the country’s foreign reserves, and the increased level of global policy uncertainty.
Meanwhile, Simonis Storm reported that Namibia’s trade sector showed some improvement in December 2024, with the trade deficit narrowing to N$119 million, down from N$5.5 billion in November 2024.
This marks the lowest deficit recorded in the past 12 months, reflecting a positive shift in trade dynamics.
“This reduction in the trade deficit is a notable shift in Namibia’s trade balance, showing potential for recovery through improved export performance,” Simonis Storm stated.
The firm noted that over the past year, Namibia’s trade deficit has averaged N$3.3 billion, highlighting persistent structural challenges but also indicating growth potential with stronger exports.
The improvement in the trade balance was driven by a surge in exports, which increased to N$12.6 billion—marking a 3.4% month-on-month rise and a 16.1% year-on-year growth.
“This expansion was fueled by strong demand for Namibia’s key exports, including diamonds, uranium, and non-monetary gold, which continue to perform well in international markets,” Simonis Storm reported.
Increased demand from China, Botswana, and Zambia played a crucial role in boosting export earnings, highlighting Namibia’s growing integration into regional and global supply chains.
However, imports remained significant at N$12.7 billion, though they fell by 28.0% from November 2024. This decline was primarily attributed to lower imports of aircraft, motor vehicles, and capital goods.
“Despite the improvement in the trade deficit, Namibia’s import dependency remains high, with continued reliance on foreign goods, particularly fuel, machinery, and capital goods,” Simonis Storm stated.
The firm cautioned that while the reduction in the trade deficit in December is a positive sign, it may be temporary, driven by fluctuating import patterns.
“Namibia must focus on export diversification and reducing reliance on high-cost imports to achieve a more sustainable trade balance,” Simonis Storm added.
