The Namibia Statistics Agency (NSA) has released the trade statistics for the second quarter 2018 on 13 September 2018. The trade statistics refer to trade in goods only and exclude the trade in services. Namibia usually achieves a surplus in the trade of services.
Herewith a few highlights:
The quarterly trade deficit dropped to the lowest level over the past couple of years only second to the first quarter of 2016 when a deficit of NAD448 million was recorded. The increase in the value of exported fish and of imported fish that is further processed in Namibia is encouraging. The value of fish exports was the second highest over at least the past five years. Likewise, the increase in the export value of meat, while the value of live animal exports dropped suggests that more value was added to livestock in Namibia.
However, there are some worrying trends as well: Based on monthly data, exports are on a downward trend, which could be a reflection of declining commodity demand and prices, although the depreciation of the Namibia dollar should result in higher commodity prices in the local currency. Moreover, a large and increasing share of exports consists of re-exports, meaning these are goods that were imported and then exported either during the same or a later quarter. These are not goods produced in Namibia and exported. In fact, the share of goods produced in Namibia over total exports is declining. In the fourth quarter of 2017, re-exports accounted for 32.3% of total exports. This share increased to 42.1% in the first quarter 2018 and 54.5% in the second quarter 2018. It is not only the share that is declining, but also the value of domestically produced exports. In the fourth quarter of 2017, exports excluding re-exports amounted to NAD12.4 billion, in the first quarter 2018 to NAD11.0 billion and in the second quarter 2018 to NAD10.4 billion. Only these exports will increase Namibia’s foreign exchange reserves.
The strong depreciation of the Namibia dollar in particular at the end of August and beginning of September will increase the value of imports, in particular of mineral fuels, but also the value of exports in the domestic currency. The overall impact on the trade deficit depends on the elasticity of demand, i.e. whether the demand for imports drops faster than the price of imports increases and whether the demand for Namibian exports increases. Rising oil prices supported by looming US sanctions against Iran’s oil exports will put further pressure on the trade balance. The demand for commodity exports is relatively inelastic, since commodities are traded mainly in US dollar. It remains to be seen, whether Namibia could gain a competitive advantage for other export products (processed and manufactured goods) due to the more favourable exchange rate.