WINDHOEK – The economic figures for the first three months of this year may be indicating positive increases in various sectors of the economy, but when scrutinised, they certainly do not appear encouraging when compared to the last three months of last year, and to the previous quarters before. Compounding this sombre news are the possibilities of more increases in oil prices, the closure of businesses in the mining sectors and the on-going retrenchments, coupled with an already huge trade deficit saddling Namibia, which – all together – give the indications that the next three months are not going to be a smooth ride either.
One of the most pressing issue for Namibia currently is the need to buffer up its trade deficit, which shot up 49 percent from N$4,8 billion by the end of December 2017 to N$8,3 billion by the end of March 2018. Comparing current trade deficit to that of 2017, Namibia’s trade balance account is 71 percent in red. To come back from such a negative figure, a combination of domestic investments and direct foreign investment are needed to stimulate a creation of new jobs, and cause a reverse in current trend of increasing import and decreasing exports.
According to the Bank of Namibia’s newly released trade figures for the first quarter production of commodities – uranium, diamonds, gold and zinc – increased in the first three months of 2018. However, with the exception of diamond production, which has been on an upward trend since the second quarter of 2017, production of other commodities has been on a downward trend.
Uranium production declined, quarter-on-quarter, by 22.5 percent, partly due to water shortages, coupled with the scale-down in production by Langer Heinrich Uranium mines as a result of the depressed uranium prices. International uranium price declined by 3.8 percent, year-on-year but increased by 3.3 percent quarter-on-quarter, the Bank of Namibia report indicated.
In fact, production of zinc is at levels last seen in second quarter of 2016, gold production is near levels last experienced in second quarter of 2015, uranium production is at levels when the uranium production was on its upward trajectory to peak at levels never before recorded in last four or five years. The highest peak recorded was in the last quarters of last year.
The agricultural sector also did well in the last three months of this year, with he number of cattle marketed rising dramatically by 26.3 percent to 110 325 heads of cattle, from about 81 309 heads of cattle marketed in the last quarter of 2017. However, while there is a sharp increase in the number of cattle marketed, there is a somewhat constant movement in the number of small stock marketed. On a quarterly basis, the number of small stock marketed rose by 4.3 percent as reflected in the number of small stock slaughtered for export as well as live exports to South Africa. However, when compared to the year-on-year figures, with exports to South Africa declining by 8.8 percent, the livestock slaughtered for exports declined 38.5 percent, while those slaughtered for local consumption declined by 43.3 percent. “The decline in the population of small stock as a result of drought contributed to a reduction in small stock marketing activity during the quarter under review,” noted the report.
In the retail and wholesale sector, there was a marginal increase of only 0.4 percent, following two years of decline. Wholesale and retail in particular declined significantly from the continuous increase in volumes that were being recorded throughout 2017, and is now at levels experienced in the second quarter of 2017. The sales of new vehicle has stopped declining since December 2017, and has remained stagnant.
The report notes that for most of the subsectors in the retail trade subsector, however, real turnover remained weak, suggesting that domestic demand is still low. The underlying factor behind this low demand remains the subdued local economic activity. “On a quarterly basis, the real turnover of the wholesale and retail trade sector decreased by 12.4 percent during the first quarter of 2018, which largely represents seasonal variations,” it said.
“Sales of new vehicles continued to perform dismally, declining substantially by 11.6 percent, year-on-year, to 3 602 units during the first quarter of 2018. The decline in sales of vehicles is in line with the contraction in instalment credit, coupled with reduced procurement of new vehicles by the government and more stringent requirements of the amended Credit Agreements Act,” reads the report.