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By: Nghiinomenwa Erastus

The potential geopolitical, economic, and asset implications of the conflict unfolding between Russia and the West over Ukraine is becoming the main down risk to global and, to a larger extent local growth forecast.

Revealed the Goldman Sachs, in their Global Macro Research Issue, released on the last week of February this year, titled Russia Risk.

The analysis added that the de-globalization trend that these geopolitical risks reflect could reinforce today’s other primary global concern—inflationary pressures.

Together, Goldman Sachs indicated that Russia and Ukraine produce 15-20% of the global output of the primary grains consumed by the world.

Russia is also a significant global producer of hydrocarbons and most industrial metals.

Given the tightness in global commodity markets, any disruption to the regions’ exports is bound to impact commodity markets majorly.

“No matter where the current crisis goes from here, the damage to globalization is already occurring,” wrote Goldman Sachs researchers.


Given the significance of the two countries’ contribution to the world food security and minerals, food and agricultural related products are expected to experience price increases so as minerals commodities.

The same trend is being experienced in fuel prices due to Russia being a significant producer of crude.

According to Simonis Storm’s analysis, the biggest of these potential impacts include the global oil price shock, inherent risks to economic recovery and inflation in Namibia.

Namibians have already seen the volatility in global oil prices surged as a result, and being a net importer of oil, local fuel prices had to be adjusted.

“If global oil prices remain elevated or continue to rise (which is more likely), then Namibians can expect higher fuel prices in the coming months, potentially reaching N$18 to N$20 per litre,” wrote Simonis Storm researchers.

Furthermore, Namibia has experienced significant annual price increases in some of the food products in which Ukraine is a large global producer or exporter.

According to Simonis Storm’s observations, this includes cooking oil prices, which increased by 21,4% on average in Namibia in the last year alone.

Food production and exportation in Ukraine are likely disrupted with the ongoing resistance battle against Russia.

This will severely impact global food production and has significant food security risks to North African countries that greatly rely on Ukraine’s food exports.

Simonis Storm’s analysis also projects that Namibia can expect higher prices in bread, corn, baking flours, honey, beverages in aluminium cans, cheese, cooking oils, and many other products.

In 2021, food and non-alcoholic beverages accounted for about 20% of inflation (the second biggest contributor).

The alcoholic beverages and tobacco category was usually the third biggest driver of inflation during 2021 (accounting for about 11% of inflation).

Another channel through which the conflict will reach Namibia is through barley demand.

Global beer-producing countries are likely to scramble for barley from other countries if risks to barley production in Ukraine amount.

Simonis Storms’insight revealed that the conflict would increase barley’s global prices, leading to higher beer prices.

Namibia currently does not have any barley producing operations and therefore remains vulnerable to global barley prices.

This could increase beer production costs and ultimately higher consumer prices for different beer products.

Barley is also a component of animal feed and could implicate farmers’ input costs worldwide, leading to higher livestock prices.

Another observation by Simonis Storm researchers is that trade between Namibia and Ukraine has decreased since 2014.

The main export products were grapes, precious stones, diamonds, manganese ore, iron fasteners, ivory and tanned fur skins.

The main import products from Ukraine into Namibia include poultry meat, malt, seed oils, wheat, engine parts, packaged medicaments, refined petroleum, and electric batteries.

With the above-mentioned risks to global food prices, Simonis Storm highlighted that local inflation in Namibia could surpass the forecast of 4,7% for 2022.

Another channel documented how the conflict will impact Namibia’s economy is through spillover effects from oil price rise and cost of inputs (commodities) into other developed economies, especially those that consume Namibia exports.

Limiting growth in sectors reliant on trade with developed countries and foreign currency reserves with the Bank of Namibia.

“If we see lower growth in developed markets as a result of higher oil prices, we could see lower external demand for Namibian export products, and therefore we could see a decrease in commodity and raw material demand from Namibia’s main trading partners,” according to Simonis Storm’s insights.

This could affect SACU revenue (typically 33% of total government revenue) will be under pressure in the next couple of months.

Furthermore, it will further pressure government finances if high global oil prices persist and weaker economic data in our trading partner states are observed.

Another way the crisis will affect Namibia positively this time is the commodity prices are set to remain elevated or edge higher.

Due to rising geopolitical tensions, global metal prices have increased by 11% in the last two months.

Year to date, commodities mined in Namibia such as gold and copper saw their futures contracts prices increasing by 8,5% and 10,4%, respectively in the US, while globally, zinc prices have increased by 4,5%, diamonds (7,7%) and uranium (2,4%), according to Simonis Storm tracking.

These price developments and a stronger US dollar provide a favourable environment for local mines to fetch higher export prices and increase corporate earnings.

Consequently, improving Namibia’s trade and current account balance, paying higher corporate taxes, which support the fiscal position, and increasing import taxes and levies paid by foreign countries.



Julia Heita

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