Import rise widens trade deficit
ALAN PEAT
IN NAMIBIA the trade pattern in 2003 was rising imports, falling exports and a widening in the balance of trade gap.
But the future picture is still relatively rosy, according to Henry Flint, senior Africa researcher in Standard Bank’s economics division.
“Imports rose in 2003 due to the country’s strong demand for consumer goods,” he said, “and have also been bolstered by the import requirements of large projects.
“The stronger exchange rate and improved household finances may also have contributed to higher imports.”
This, however, has benefited SA, Flint added.
“Due to historical ties and limited industrial development, a significant percentage of manufactured and other goods and services are imported into Namibia, mostly from SA.”
However, exports have meantime slumped, with a major influence having been the stronger exchange rate. This - combined with subdued global commodity prices - has impacted negatively on exports in general, according to Flint.
“But exports were supported in 2003 by an increase in diamond export volumes and livestock, meat and meat products.
“The latter has grown significantly due to drought conditions that have forced farmers to cut down on their stock.”
Exports have also benefited from increased demand from Angola as stability returned to that country, output from Skorpion Zinc and textiles from Ramatex.
“Exports should increasingly benefit from zinc output as the Skorpion project moves toward full capacity in 2005,” said Flint.
But, while the future looks more encouraging, the net effect of the events in 2003 was a widening of the trade deficit, he added.
Flint also acknowledged that a contributor to the improved situation in 2003 was an increase in revenue from the Southern African Customs Union (SACU).
“This increase is not sustainable,” he said, “as the new revenue sharing formula and drive towards trade liberalisation is expected to result in falling revenues from this source.”
But Flint still forecasts that the positive outlook for higher exports in 2004 should support the trade balance - and, in turn, the current account.
