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• KENNETH ODERO
The latest trade war between the world's largest economies – China and the United States – should be a source of consternation for many countries, including Namibia
. In this unpredictable tandem, fear is growing that the worst is yet to come, as markets and industry seem to be wary of the latest template. What is certain is that this trade war comes quickly as a result of a global export growth market already experiencing a slowdown.
At the same time, the price of fuel has peaked
Countries like Namibia, whose economies depend on trade (almost all countries do so, but the extent of trade dependence varies ) the prospects of a full-fledged trade war. Here is the reason why.
Trade wars do not only have economic consequences. They are also, if not more, a political problem. However, this article examines the potential economic consequences of the current trade war due to limited time and space.
The value of Namibia's international merchandise trade has doubled from US $ 2.07 billion in 2005 to US $ 4.084 billion in 2016. Fast over the same period, rising from about 2 , 58 billion US dollars to 6.84 billion US dollars, an increase of 165%.
For Namibia's open trade economy, these exports and imports account for a significant proportion of total GDP. Changes in imports and exports affect the balance of payments (the difference between the total value of payments into and out of a country over a given period), a key factor in national economic policy.
THE FACTS
this month, the United States imposed 25 percent duty on over 800 Chinese products, including industrial machinery, medical devices and auto parts. Worth 34 billion US dollars. China fought back with its own rights on US goods of comparable value ($ 34 billion).
This seems to be just the beginning of a long and costly war, given the noises coming from Washington and Beijing. According to current estimates, Namibia exports goods valued at US $ 4.82 billion (2017), ranging from diamonds, copper ore concentrates, and gold (including oil). 39; platinum-plated gold), raw zinc, iron or steel articles, among others.
North America, Europe and Asia are the main export markets by the gross value of exports. These are the same areas where the first twenty-first century trade war broke out. It is therefore appropriate to think that this war may aggravate the economic difficulties both at national and international level.
To define the context, there are already major changes related to the transformation of industry to services in developing and industrialized economies. are of interest and concern.
In the mining and quarrying, electricity, gas, water and construction sectors, for example during the period 2011-2016, the share of gross value added by activity in the developed economies fell by 24% to 23%. %. But the biggest drop has been in developing economies.
Asia and Oceania recorded a decline of seven percentage points, from 43% to 37% in 2011 and 2016, respectively. The opposite is true for services.
As can be expected, the growth rate of world trade volume was low, with the volume indices of world exports and imports increasing by 0.2% and 0.7%, respectively. first quarter of 2018 compared to the previous quarter. This is in the context of rising fuel prices, with the resulting effect of driving on commodity price indices.
In the transportation and logistics sector, for example, carriers and shippers have already begun to feel the effects of rising prices for shipping products around the world. This has led some to suggest that a continuation of escalation would entail serious consequences for world trade.
While it may be prudent to assume that the disruptive effect of a prolonged trade war is likely to be profound, it is far from clear how the impacts are likely to unfold, and how long they are likely to linger before starting petering. For an economy that has gone through austerity over the last 12 months and still counts, the news of a trade war could not have come at a worse time.
* Kenneth Odero is an associate professor at the German Logistics Institute of Namibia, as part of the Namibian University of Science and Technology.
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