Only 15 countries account for 89% of Namibia’s total export bill since 2018, with China being the only country outside of SADC that has a double-digit stake in the export bill (17%), research firm Simonis Storm has said.
In a trade statistic report released last week, the firm highlighted that this places Namibia’s export basket at higher risk given that Namibia’s export market is very concentrated.
“Also, these countries’ trade wars, shortages and political issues would naturally impact on their demand for our exports as well,” further said Simonis Storm.
The firm went on to add that Namibia faces a lack of diversification in its export partners.
Since 2018, Namibia has exported a total of 45% of its total exports to SADC member states, with exports year to date (YTD) to SADC accounting for 52% of the total export bill. Within SADC, 20% of Namibia’s exports usually go to South Africa, 13% to Botswana, 7% to Zambia, 4% to DRC and 1% each to Angola and Zimbabwe.
Second quarter trade
Namibia’s trade activity in value increased by 6.1% y/y in 2Q2023, driven by higher exports (up 25.5% y/y), but weighed down by imports (down 5.8% y/y).
“Given that exports grew faster than imports, the trade balance narrowed from a deficit of N$12.6 billion in 2Q2022 to a deficit of N$5.5 billion in 2Q2023. YTD, total trade volumes (i.e. quantities in tonnes) grew by 20.7% in 1H2023 compared to 1H2022, while trade activity in value terms grew by a meagre 7.8% in the same period. Although our trade balance is in negative territory, export growth has materially improved on the back of increased mining production,” the firm said.
Imports remain expensive given the weaker Rand exchange rate during 2023 compared to 2022, which is reflected in growth of the import bill for June (up 13.6% y/y), while import volumes decreased (down 50.3% y/y).
“At the time of writing, the Rand has weakened by a further 6.54% YTD and is currently 18.14 compared to about 16.50 a year ago. During June 2023, the value of exports declined by 1.1% y/y, despite export volumes increasing by 51.6% y/y in the same month. The decrease in our export bill was mainly due to lower exports of Uranium (down 47.5% y/y), livestock (down 10.1% y/y), alcoholic beverages (down 64.6% y/y) and copper (down 99.8% y/y). However, exports in June 2023 included diamonds (27.1% of export bill), fish (17.1%), gold (9.2%) and uranium (7.3%), accounting for 60.7% of our total export bill.”
Notably, advanced economies have largely avoided recessions in 1H2023 due to households drawing down on savings and supporting spending in advanced economies, low unemployment rates and additional jobs have improved spending power in rich countries and according to research firm Capital Economics, European factories have maintained their production levels due to fuel switching and substitution of energy intensive production inputs through imports.
“There are however a number of indicators pointing to a slowdown in spending and trade activity in the near future. Household savings have reduced significantly, with most of the remaining balances held by high income households who typically have a lower propensity to consume. As a percentage of income, savings have also decreased significantly in advanced economies. As spending by consumers have normalised, pressures on global supply chains have eased. Reports of product shortages along global supply chains have decreased significantly as a result and are close to historic averages before 2020,” explained Simonis Storm.
China’s exports saw its steepest decline (down 12.4% y/y) since the pandemic in June 2023. Exports in the US (down 24% y/y) for the 11th consecutive month, also the worst since the pandemic. Trade activity in the Eurozone is showing signs of recovery, while the UK trade activity has slumped. These latter two regions face low domestic demand. Although these results raise concerns, global supply chains are easing as global shortages are decreasing.
“At the same time, consumers continue to shift spending towards services and away from merchandise goods. Purchasing Managers Indices for manufacturing and services follow the same trend both globally and for selected countries, where we see that the outlook on manufacturing is in contractionary territory (below 50 index points) and sentiment for services is in the expansionary territory (above 50 index points).”