Decline in imports in Q2 sees current account switch to a surplus of N$285 million
A sharp decline in imported goods as well as reduced investment income payments to foreigners caused the current account to switch to a surplus of N$285 million in the second quarter of 2020, compared to a deficit of $133 million recorded in the second quarter of 2019, according to the latest data from the Bank of Namibia.
The goods balance returned a surplus of N$51 million in the period under review, mainly thanks to a much lower merchandise import bill of N$731 million as the value of imports in all subcategories fell.
On the other side of the goods trade ledger, exports fell by 16% yearly to N$782 million. Exports of food and live animals declined by 69% while manufactured goods fell by 44% and ‘other’ commodities fell by 56% fell the most.
In sharp contrast, exports of other mineral products increased significantly to 52%, which the Central Bank ascribes to higher volumes of gold and zinc concentrate exports. Uranium’s share of goods exports has increased steadily in recent year, while diamonds’ share is declining.
Namibia continues to source most of its goods imports from South Africa (58.5%) followed by India (7.6%) and China (7.6%). The country mainly imports fuel and consumer goods from South Africa and medicine and machinery from India and China.
“The global economic outlook remains precarious we now expect the global economy to contract by about 4.2% this year and foresee no major medical breakthrough in the pandemic until the second half of 2021 which bodes ill for the demand for Namibia’s exports,” Head of Research at PSG Namibia, Eloise du Plessis said.
While the prices of some commodities such as gold and uranium have increased this year, the prices of other key commodity exports such as copper, zinc and diamonds have fallen. Du Plessis notes the indefinite closures of the Skorpion zinc and Weatherly copper mines this year will be a big blow to mineral and manufacturing exports in 2020.
“Nevertheless, in the short term sluggish domestic demand and lower crude oil prices will help to keep the import bill in check,” she said.