Figure 1: Merchandise Trade Balance in Namibia (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
Total merchandise imports to Namibia have increased to USD 8.3 billion in 2018, from an annual average of USD 7.1 billion from 2015 to 2017[1]. Exports also increased to USD 4.9 billion in 2018 from an annual average of USD 4.2 billion from 2015 to 2017[2]. The stronger growth in imports has worsened Namibia’s persistent merchandise trade deficit to -USD 3.4 billion in 2018 from a deficit averaging -USD 2.9 billion from 2015 to 2017[3]. The slower growth in export earnings has led to a deterioration of gross official reserves due to the persistent and widening merchandise trade deficit.
Figure 2: Gross Official Reserves in Namibia (2016-2022)
Source: IMF 2018, Namibia 2017 Article IV Report. Note: (*) Figures from 2018 onwards are projections from the IMF, 2018.
Gross official foreign exchange reserves decreased to USD 2.2 billion in 2018 from an annual average of USD 2.0 billion from 2015 to 2017[4]. During this period, the NAD appreciated by 1.2% in 2018 to NAD 13.2 per USD (2017: 10.2%)[5]. The appreciation in currency was largely due to movements in the South African Rand, to which the NAD is pegged, given the slower growth in Namibian exports[6]. The NAD depreciated by an annual average of -14.0% in 2015 and 2016 from NAD 10.8 per USD in 2014 to NAD 14.7 per USD in 2016[7]. Gross official reserves are projected to remain largely unchanged at USD 2.2 billion in 2019, which is equivalent to 3.5 months’ import cover[8]. In the forward-looking medium-term from 2020 to 2022, gross official reserves are projected to decrease to an annual average of USD 1.7 billion (approx. 2.5 months’ import cover)[9]. Rising imports due to appreciation of the NAD and rising foreigners’ income from Namibia have undermined the improvement in Namibia’s current account balance.
Namibia’s current account balance improved to a deficit of -USD 480.0 million in 2018, from a deficit averaging -USD 1.1 billion from 2015 to 2017[10]. In spite of the growth in exports, which improved the current account balance, this has been undermined by rising imports and foreigners’ income from Namibia leading to further deterioration of the current account balance. Total merchandise imports to Namibia increased to USD 8.3 billion in 2018 from USD 6.8 billion in 2017[11]. Foreigners’ investment income from Namibia increased to USD 336.0 million in 20178 from USD 218.0 million in 2017[12]. The current account balance is projected to deteriorate to a deficit of -USD 723.0 million (approx. -5.1% of GDP) in 2019[13]. In the forward-looking medium-term from 2020 to 2022, the current account balance is projected to deteriorate to a deficit averaging -USD 900.7 million (approx. -5.7% of GDP)[14].
Figure 3: Current Account Balance in Namibia (2016-2022)
Source: IMF 2018, Namibia 2017 Article IV Report. Note: (*) Figures from 2018 onwards are projections from the IMF, 2018.
However, Namibia is still heavily dependent on raw commodity exports which have been affected by commodity price volatility and the general decline in commodity prices since 2014. For example, copper prices declined by an annual average of -12.6% from USD 6863.4 per MT in 2014 to USD 4867.9 per MT in 2016, before recovering to USD 6169.9 per MT in 2017[15]. Uranium prices have been volatile and declined by an annual average of -11.6% from USD 36.8 per ounce in 2015 to USD 22.1 per ounce in 2017, before recovering to USD 24.5 per ounce in 2018[16]. Raw commodities like copper, diamonds and uranium contributed 41.9% of Namibia’s total export earnings in 2018 which has increased from the average of 36.7% from 2015 to 2017 (2014: 34.8% of exports)[17]. In addition, Namibia is dependent on agricultural exports which have made exports earnings volatile due to exports being vulnerable to the adverse impact of climate change. Fish and live animals contributed an addition 15.1% of total exports in 2018, bringing the total contribution of agricultural and raw commodity exports to 57.0% of total exports in Namibia (2015-‘17: 54.9% of total exports)[18]. In spite of this concentration of exports, Namibia is highly integrated in terms of regional trade with neighbouring countries in SADC but its trade is unbalanced.
The top-five exports from Namibia to SADC are diamonds, fish, gold, live animals and alcoholic beverages which constituted 21.8% of total exports in 2018 (2015-‘17: 31.7% of total exports)[19]. The value of the top-five exports from Namibia to SADC decreased to USD 1.0 billion in 2018 from an annual average of USD 1.3 billion from 2015 to 2017[20].
The value of total exports from Namibia to SADC decreased to USD 1.6 billion (approx. 32.3% of total exports) in 2018 from an average of USD 1.9 billion (approx. 44.6% of total exports)[21]. These are very high levels of intra-regional trade given that the SADC average intra-regional exports level was 17.9% of total exports in 2018. The SADC intra-regional exports, meaning total exports amongst SADC countries, as a share of total exports to the world decreased from an average of 20.8% from 2015 to 2017[22].
Figure 4: Nominal Exchange Rate in Namibia (2015-2018)
Source: BoN 2019, Bilateral Exchange Rate.
Namibia’s top-five imports from SADC are copper, petroleum, diamonds, commercial vehicles and passenger vehicles. These imports are diversified and constituted 18.1% of total imports to Namibia in 2018 (2015-‘17: 20.0% of total imports)[23]. The value of the top-five imports from SADC to Namibia increased to USD 1.5 billion in 2018 from an annual average of USD 1.4 billion from 2015 to 2017[24].
The value of Namibia’s total imports from SADC remained largely unchanged in nominal terms at USD 4.9 billion (approx. 59.3% of total imports) in 2018 from an annual average of USD 5.0 billion (approx. 70.5% of total exports) from 2015 to 2017[25]. These are very high levels of intra-regional trade given that the SADC average intra-regional imports level was 20.9% of total imports in 2018[26]. The SADC intra-regional imports, meaning total imports amongst SADC countries, as a share of total imports from the world increased only slightly from an average of 20.7% from 2015 to 2017[27].
Table 1: SADC Regional Trade for Namibia (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
Namibia maintains a persistent and growing merchandise trade deficit in SADC which increased to -USD 3.3 billion in 2018 (2015-’17: -USD 3.1 billion). In addition, Namibia is heavily dependent on SADC as the main source of its imports given its trade deficit in the region. Therefore, there is significant room for Namibia needs to increase its exports to SADC countries. This would make Namibia’s intra-regional trade balance in SADC more equitable.
[1] UNCTAD 2019. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: https://unctadstat.unctad.org/ [Last Accessed: 26 September 2019].
[2] UNCTAD 2019. UNCTADStat Database, ibid.
[3] UNCTAD 2019. UNCTADStat Database, ibid.
[4] IMF 2018. Namibia 2017 Article IV Report; International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 26 September 2019].
[5] BoN 2019. Bilateral Exchange Rate, Bank of Namibia: Windhoek. Available At: http://www.bna.ao/ [Last Accessed: 18 October 2019].
[6] BoN 2019. Bilateral Exchange Rate, ibid.
[7] BoN 2019. Bilateral Exchange Rate, ibid.
[8] IMF 2018. Namibia 2017 Article IV Report, ibid.
[9] IMF 2018. Namibia 2017 Article IV Report, ibid.
[10] IMF 2018. Namibia 2017 Article IV Report, ibid.
[11] IMF 2018. Namibia 2017 Article IV Report, ibid.
[12] IMF 2018. Namibia 2017 Article IV Report, ibid.
[13] IMF 2018. Namibia 2017 Article IV Report, ibid.
[14] IMF 2018. Namibia 2017 Article IV Report, ibid.
[15] IMF 2019. IMF Primary Commodity Prices, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 4 October 2019].
[16] IMF 2019. IMF Primary Commodity Prices, ibid.
[17] UNCTAD 2019. UNCTADStat Database, ibid.
[18] UNCTAD 2019. UNCTADStat Database, ibid.
[19] UNCTAD 2019. UNCTADStat Database, ibid.
[20] UNCTAD 2019. UNCTADStat Database, ibid.
[21] UNCTAD 2019. UNCTADStat Database, ibid.
[22] UNCTAD 2019. UNCTADStat Database, ibid.
[23] UNCTAD 2019. UNCTADStat Database, ibid.
[24] UNCTAD 2019. UNCTADStat Database, ibid.
[25] UNCTAD 2019. UNCTADStat Database, ibid.
[26] UNCTAD 2019. UNCTADStat Database, ibid.
[27] UNCTAD 2019. UNCTADStat Database, ibid.
