High costs of import items a risk to growth
Bill increased to N$11.9 billion in July
The Bank of Namibia projects the domestic economy to grow by 3.3% in 2023.
High costs of key import items pose a risk to the Bank of Namibia’s (BoN’s) economic growth forecast of 3.3% in 2023.
According to the Namibia Statistics Agency (NSA), July recorded a 17.8% increase in the import bill to N$11.9 billion from N$10.1 billion registered in June.
Petroleum oils topped the list of imported goods in July, with a share of 15.3% of the total import value. They were mostly sourced from Oman and Saudi Arabia.
The ministry of mines and energy on Monday announced that petrol prices for ULP95 will increase by N$1.20, while diesel prices for both 50ppm and 10ppm will increase by N$1.70, effective today.
Therefore, the price of petrol in Walvis Bay will increase to N$20.98 per liter, while the price of diesel 50ppm will be N$20.75 per liter and that of 10ppm N$20.95 per liter.
Fin24 reported that Brent crude oil prices increased by almost 4% over the past month as Russia cut back on its exports. Saudi Arabia has also lowered its production, while oil prices have also been firming on expectations that the US may avoid a recession and that the Chinese government will stimulate its economy.
Fuel prices are determined by the oil price and the rand-dollar exchange rate, as oil is priced in US dollars. The rand has weakened more than 1% against the dollar over the past month. The rand hit R19.26/$ early on Tuesday, its weakest level in weeks.
Impact
According to economic analyst Joseph Shehaama, when fuel prices increase, a large share of households’ budgets is likely to be spent on it, which leaves less to spend on other goods and services.
The same goes for businesses whose goods must be transported from one place to another. Fuel is used as a major input in the mining, agriculture, and construction industries.
As a result, inflation will increase and the central bank may be pushed to hike the repo rate. Despite Namibia’s inflation rate coming in at 4.50% in August, this does not mean that the Bank of Namibia cannot increase the repo rate, given the 50 basis points differential between Namibia and South Africa, Sheehama said.
Exports
During July 2023, Namibia’s export earnings decreased by 3.8% from N$8.6 billion recorded in June to N$8.3 billion. The trade deficit worsened to N$3.7 billion in the period under review, compared to a trade deficit of N$1.5 billion recorded in June 2023.
Diamonds were Namibia’s largest exported commodity in July 2023, accounting for 30.5% of total exports (of which 7.0% were re-exports) and were destined for Botswana, the United Arab Emirates and Hong Kong.
Uranium came second in the list accounting for 15.2% of the total exports and was solely destined for China, NSA [email protected]
According to the Namibia Statistics Agency (NSA), July recorded a 17.8% increase in the import bill to N$11.9 billion from N$10.1 billion registered in June.
Petroleum oils topped the list of imported goods in July, with a share of 15.3% of the total import value. They were mostly sourced from Oman and Saudi Arabia.
The ministry of mines and energy on Monday announced that petrol prices for ULP95 will increase by N$1.20, while diesel prices for both 50ppm and 10ppm will increase by N$1.70, effective today.
Therefore, the price of petrol in Walvis Bay will increase to N$20.98 per liter, while the price of diesel 50ppm will be N$20.75 per liter and that of 10ppm N$20.95 per liter.
Fin24 reported that Brent crude oil prices increased by almost 4% over the past month as Russia cut back on its exports. Saudi Arabia has also lowered its production, while oil prices have also been firming on expectations that the US may avoid a recession and that the Chinese government will stimulate its economy.
Fuel prices are determined by the oil price and the rand-dollar exchange rate, as oil is priced in US dollars. The rand has weakened more than 1% against the dollar over the past month. The rand hit R19.26/$ early on Tuesday, its weakest level in weeks.
Impact
According to economic analyst Joseph Shehaama, when fuel prices increase, a large share of households’ budgets is likely to be spent on it, which leaves less to spend on other goods and services.
The same goes for businesses whose goods must be transported from one place to another. Fuel is used as a major input in the mining, agriculture, and construction industries.
As a result, inflation will increase and the central bank may be pushed to hike the repo rate. Despite Namibia’s inflation rate coming in at 4.50% in August, this does not mean that the Bank of Namibia cannot increase the repo rate, given the 50 basis points differential between Namibia and South Africa, Sheehama said.
Exports
During July 2023, Namibia’s export earnings decreased by 3.8% from N$8.6 billion recorded in June to N$8.3 billion. The trade deficit worsened to N$3.7 billion in the period under review, compared to a trade deficit of N$1.5 billion recorded in June 2023.
Diamonds were Namibia’s largest exported commodity in July 2023, accounting for 30.5% of total exports (of which 7.0% were re-exports) and were destined for Botswana, the United Arab Emirates and Hong Kong.
Uranium came second in the list accounting for 15.2% of the total exports and was solely destined for China, NSA [email protected]
Comments
Namibian Sun
No comments have been left on this article