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Namibia’s trade balance widens by 58,3%

Namibia’s strong mining sector and huge foreign interest in the sector promise the country positive results as the world transitions to clean energy.

This, together with the potential of rare earth metals could offer the country a higher export bill.

This is according to an analysis of trade statistics for July by Simonis Storm Securities.

The analysts, however, note that the country is still faced with the challenge of a lack of manufacturers to export more finished goods.

As a result, Namibia’s trade balance widened by 58,3% year on year (y/y) in July 2023 to the largest deficit since September 2022, the analysis states.

Simonis says the country’s exports decreased by a meagre 0,2% y/y, while imports increased by 12,5% y/y in July this year.

“The export bill recorded N$8,3 billion, while the import bill amounted to N$11,9 billion, exceeding the export bill by 0,7 times.

“This translates to a trade deficit of N$3,7 billion. This is the widest trade deficit for the month of July since 2019,” says Simonis.

The analysts observed that imports 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% year to date (YTD).

The average rand exchange for July was R18,16 to the United States dollar.

“This is an upside risk for imports to Namibia and inflation rates as Namibia is a net importer of goods, which exposes consumers to import inflation,” says Simonis analyst Angelique Bock.

According to the analyst, Covid-19 has caused major supply issues globally, which hindered trade among countries, but YTD trade has improved beyond pandemic levels.

YTD, the value of trade sets 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.

At the same time, the import bill since January amounts to N$74,8 billion, 4,2% higher than 2022, and 14,3% higher than in 2019.

This further substantiates that trade has fully recovered since the pandemic, says Bock.

Additionally, YTD trade balance narrowed by 19,8%, compared to the same period in 2022.

This translates to positive growth expectations for the annual gross domestic product (GDP) of 2023, and an anticipated outperformance of the 2,1% GDP growth in 2022.

Diamonds worth N$2,5 billion were the top export product in July 2023, followed by uranium at 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 export commodity to fourth.

“Fish, being one of our consistently largest exports, accounts for 14% of our exports and 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,” the analyst says.

Uranium exports placed Namibia as the fourth-largest producer between 2013 and 2022.

Last year, Namibia was the third-largest producer of uranium worldwide.

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