Namibia’s trade deficit widened by 58.3% to N$3.7 billion during the month of July as the growth in imports outpaced the rise in exports, latest data reveals.
According to Simonis Storm Securities, the export bill decreased by a meagre 0.2% year-on-year (y/y), however, the import bill increased by 12.5% y/y in July 2023.
The export bill amounted to N$8.3 billion during the month under review while the import bill amounted to N$11.9 billion, exceeding the export bill by 0.7 times.
“This is the widest trade deficit for the month of July since 2019. Imports have remained costly due to the weaker Rand exchange rate in 2023 compared to 2022. The Rand has depreciated by 8.1% since July 2022, and 5.1% YTD,” Simonis Storm Securities Researcher Angelique Bock said in a report.
The average Rand exchange for July was R18.16/$. Bock said this is an upside risk for imports to Namibia and inflation rates as the country is a net importer of goods, which exposes consumers to import inflation.
During the month of July 2023, the Baltic Dry Index (BDI) has increased by 3.3% m/m which indicates that shipping prices could have added to the higher import bill.
However, the researcher noted that during the month of August 2023, BDI decreased by 5.5% m/m indicating that a lower import bill can be expected going forward given that the Rand exchange does not offset lower prices.
Covid-19 caused major supply issues globally, which hindered trade among countries. Trade year-to-date has improved beyond pandemic levels.
Year-to-date, the net weight exported, exceeds the number of tonnes exported during 2020 and is currently 92.2% of the total tonnes exported in 2022.
At the same time, the average amount of tons Namibia imports, per month, are on a declining trend since 2022, and we expect this trend to continue in 2023.
“YTD, the value of trade is setting a new record when compared to the same period in previous years. Namibia exported N$59.9 billion worth of products, 12.5% higher than the prior year, and 8.4% higher than the value of exports in 2019 for the same period,” said Bock.
At the same time, she added that the import bill since January amounts to N$74.8 billion, 4.2% higher than 2022 and 14.3% higher than 2019 which further substantiates that trade has fully recovered since the pandemic.
Additionally, the year-to-date trade balance narrowed by 19.8% compared to the same period in 2022.
“This translates to positive growth expectations for annual GDP of 2023 and an anticipated outperformance of the 2.1% GDP growth in 2022. According to our 2Q2023 Quarterly Economic Review, we forecasted GDP growth of 3.2%,” she said.
Diamonds (N$2.5 billion) were the top exported product in July 2023, followed by uranium (N$1.3 billion), fish (N$1.1 billion), gold (N$910 million), petroleum oil (N$363 million), and live animals (N$201 million).
These six items account for 77% of the export bill.
Gold exports increased by 70.4% y/y, from N$579 million, moving from the fifth highest exported commodity to the fourth highest. Fish, being one of our consistently largest exports, accounts for 14% of the export bill and has increased by 33.5% y/y in July 2023.
Similar to fish, uranium accounts for 15% of our export value basket and has increased its exports by 26.9% y/y in July 2023.
Uranium exports have placed Namibia as the fourth largest producer of uranium between 2013 and 2022.
Last year, Namibia was the third largest producer of uranium worldwide.
“Given that uranium has on average accounted for 13% of our export bill since 2022, together with a weakening Rand, will enhance the export bill of Namibia and increase the GDP of Namibia. This is positive for foreign investment, as it indicates stability and growth.”
