{"id":20480,"date":"2022-05-25T16:25:28","date_gmt":"2022-05-25T16:25:28","guid":{"rendered":"https:\/\/www.africa-press.net\/namibia\/all-news\/china-slowdowns-impact-on-namibia"},"modified":"2022-05-25T16:25:28","modified_gmt":"2022-05-25T16:25:28","slug":"china-slowdowns-impact-on-namibia","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/namibia\/all-news\/china-slowdowns-impact-on-namibia","title":{"rendered":"China slowdown’s impact on Namibia"},"content":{"rendered":"

Africa-Press – Namibia. <\/strong><\/span>China, the world’s second largest economy, has been undergoing an economic slowdown that is likely to persist until the end of the year, and Namibia is affected too.<\/b><\/p>\n

According to analysts Simonis Storm Securities, the risks to China’s economic growth are mainly self-inflicted, as the government’s regulation of certain sectors and its ambition to eliminate Covid-19 infections inflict economic harm, disrupt operations across various industries and deter foreign capital.<\/p>\n

\u201cAn economic slowdown in the first half of 2023 is also likely if the government decides to enforce zero-Covid policies during their next winter season or if new variants arise,\u201d said Simonis.<\/p>\n

According to the International Monetary Fund’s (IMF) latest World Economic Outlook 2022 published in April, China’s economic slowdown could set back the economic recovery in emerging markets and developing countries, especially commodity exporters.<\/p>\n

Although there are positive developments in the medium-term outlook, with positive spillover effects for commodity exporters, Covid-19 infections and zero- Covid policies remain a key risk to economic recovery in emerging markets and developing countries, including Namibia.<\/p>\n

ECONOMIC ACTIVITY<\/p>\n

Chinese tourists accounted for about 2% of all tourists visiting Namibia in 2018 and 2019. Since 2020, Chinese tourists visiting Namibia averaged 0,6%, according to data from the Hospitality Association of Namibia.<\/p>\n

Many Namibian companies rely on import equipment from China for use in renewable energy projects such as solar panels. Due to less factory production and lower supplies in solar equipment, project delays and an increase in costs could be experienced.<\/p>\n

\u201cEquipment could be sourced from alternative markets, but mostly at higher prices than China,\u201d said Simonis.<\/p>\n

EXPORT GROWTH<\/p>\n

China is Namibia’s second largest trading partner on average, where its share of Namibia’s exports has averaged 19,1% in the last five years. Any decrease in demand from China will have an impact on Namibia’s exports, given that China alone accounts for about a fifth of total exports.<\/p>\n

Exports to China have been dominated by minerals and commodities (mainly uranium) and fish.<\/p>\n

Uranium mines are likely to experience the biggest negative impact, with immaterial effects on Namibian fish exports given that fish is a basic food item. Namibia mainly imports capital, consumer and intermediate goods, as well as clothing and textiles.<\/p>\n

Regarding Southern Africa Customs Union (Sacu) revenue, China is South Africa’s biggest importer and second biggest importer for Namibia. So, any major decrease in trade with China as a result of an economic slowdown in that country will reduce Sacu receipts and add pressure on public finances.<\/p>\n

If Namibian mining companies can remain fully operational and expand production in the medium term, much benefit stands to be earned as China commences its infrastructure plan and if commodity demand remains resilient owing to American students having higher disposable incomes.<\/p>\n

INFLATION<\/p>\n

One key risk to local fuel prices would be China’s removal of lockdown restrictions in various cities. As China reopens certain cities and industrial production as well as transportation services resume normally, an increase in demand would apply upward pressure on global oil prices.<\/p>\n

Normally, China consumes about 40 million barrels per day but currently consumes 28 million barrels with the lockdowns in place. Rising oil prices together with a weaker rand could lead to additional fuel price hikes in Namibia.<\/p>\n

Zero-Covid policies, which prevent ports and other logistics services from operating normally will also keep shipping costs high, leading to higher prices of general merchandise goods imported by South Africa and Namibia.<\/p>\n

This implies that prices of electronics, furniture and clothing in Namibia could rise further as long as supply chains are disrupted in China. Rising import costs and a weaker rand will increase the import bill and could reduce the current account balance if not countered by strong export growth in Namibia.<\/p>\n

INTERNATIONAL TRADE<\/p>\n

China’s supply chain disruptions will likely keep shipping costs high. This could lead to higher input costs to Namibian importing companies which might potentially be passed on to consumers in the form of higher prices.<\/p>\n

\u201cAlso, supply chain constraints remain a downside risk to global trade and negatively influence the quantity of exports that can take place in Namibia,\u201d said Simonis.<\/p>\n

FOREIGN DIRECT INVESTMENT<\/p>\n

China’s government is facing tighter domestic budgets and needs to balance different priorities overseas. China decreased its financial pledge to Africa for the first time in a decade, from US$60 billion in 2018 to US$40 billion in 2021.<\/p>\n

Higher risk to debt repayments from low-income countries are also deterring Chinese investors, according to the Shanghai Institute for International Studies.<\/p>\n

\u201cUnless the Namibian economy records a significant rebound, Namibia could expect to see less foreign direct investment coming from China in the near future.\u201d<\/p>\n

For More News And Analysis About Namibia<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Namibia. China, the world’s second largest economy, has been undergoing an economic slowdown that is likely to persist until the end of the year, and Namibia is affected too. According to analysts Simonis Storm Securities, the risks to China’s economic growth are mainly self-inflicted, as the government’s regulation of certain sectors and its […]<\/p>\n","protected":false},"author":84,"featured_media":20479,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5,8,16],"tags":[234,236,233],"class_list":["post-20480","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","category-homepage-english","category-twitter","tag-africa-press","tag-africa-press-namibia","tag-namibia"],"yoast_head":"\nChina slowdown's impact on Namibia - Namibia<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/namibia\/all-news\/china-slowdowns-impact-on-namibia\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"China slowdown's impact on Namibia\" \/>\n<meta property=\"og:description\" content=\"Africa-Press – Namibia. China, the world’s second largest economy, has been undergoing an economic slowdown that is likely to persist until the end of the year, and Namibia is affected too. 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