Namibia recorded a trade deficit in each month so far this year, averaging a monthly trade deficit of N$3.4 billion.
Simonis Storm Securities economist Theo Klein says the shortfall would not only have a negative impact on the 2022 GDP calculation based on the expenditure approach, but it would also contribute to a worsening current account balance.
“Indeed, preliminary figures from Bank of Namibia (BoN) show a current account deficit of N$7.3 billion in the first quarter of 2022 compared to a deficit of N$3.4 billion in the first quarter of 2021.
BoN expects foreign currency reserves to decrease by about N$4 billion (foreign reserves at N$42 billion as of June 2022) owing to a rising import bill which is mainly driven higher by fuel product prices and a weaker Rand exchange rate. This will likely worsen the current account balance till the end of the year,” said Klein.
According to him exports increased by 15.1 percent year on year in June 2022 (compared to 42.1 percent year on year in May 2022), while imports increased by 24.8 percent year on year (compared to 55.4 percent year on year in May 2022).
In addition, he said between June and May 2022, the trade deficit shrank from N$6.1 billion to N$2.5 billion and on a quarterly basis, exports increased by 3.5 percent year on year in the first quarter in 2022 and -13.8 percent year on year in the second quarter of 2022, while imports increased by 7.3 percent year on year in the first quarter of 2022 and 16.2 percent year on year in the second quarter 2022.
He also stated that Namibia is a small open economy that is heavily reliant on global trade. “Export products sold in June 2022 were mainly from the mining category (47.1%), manufacturing (46.3%) and agriculture and fishing (4.5%) and were mainly destined to Botswana (19.6% of total exports in June 2022), South Africa (18.3%), France (9.0%), China (7.4%) and Spain (6.4%),” he added.
However, Klein said imports, on the other hand, were primarily from the manufacturing (64.8
percent), mining (32.1 percent), and agriculture and fishing (2.9 percent) categories, and were primarily purchased from South Africa (35.3 percent of total imports in June 2022), India (19.2 percent), China (7.2 percent), the Democratic Republic of the Congo (5.5 percent), and Saudi Arabia (2.7 percent ).
Furthermore, he said we expect Namibia’s trade to continue printing negative balances for most of the second half of 2022.