diff --git a/sway-core/src/semantic_analysis/namespace/namespace.rs b/sway-core/src/semantic_analysis/namespace/namespace.rs
index fdb6b910ad7..cc66caa94a6 100644
--- a/sway-core/src/semantic_analysis/namespace/namespace.rs
+++ b/sway-core/src/semantic_analysis/namespace/namespace.rs
@@ -268,6 +268,7 @@ impl Namespace {
         module_span: Span,
     ) -> SubmoduleNamespace {
         let init = self.init.clone();
+	let is_external = self.module(engines).is_external;
         self.module_mut(engines)
             .submodules
             .entry(mod_name.to_string())
@@ -284,7 +285,7 @@ impl Namespace {
         new_module.name = Some(mod_name);
         new_module.span = Some(module_span);
         new_module.visibility = visibility;
-        new_module.is_external = false;
+        new_module.is_external = is_external;
         new_module.mod_path = submod_path;
         SubmoduleNamespace {
             namespace: self,
diff --git a/test/src/e2e_vm_tests/test_programs/should_pass/language/shadowing/shadowed_glob_imports/test.toml b/test/src/e2e_vm_tests/test_programs/should_pass/language/shadowing/shadowed_glob_imports/test.toml
index edf3a3eae21..75b5f2ef5a2 100644
--- a/test/src/e2e_vm_tests/test_programs/should_pass/language/shadowing/shadowed_glob_imports/test.toml
+++ b/test/src/e2e_vm_tests/test_programs/should_pass/language/shadowing/shadowed_glob_imports/test.toml
@@ -1,2 +1,2 @@
-category = "disabled"
+category = "compile"
 expected_warnings = 27