ALTHOUGH Namibia may expect subdued economic growth of around 4.2% which falls short of the national economic development target of six per cent, inflation is likely to remain within the 6% – 8% range, Old Mutual Africa Operations head, Johannes !Gawaxab has said.
The Managing Director of Old Mutual Africa Operations made the remarks as Namibians prepare for the annual holidays and to close off the year.
“Whilst challenges remain, 2013 is likely to be a better year for both the global and local economies than 2012,” he said.
“Inflation is likely to remain within the 6% – 8% range and interest rates should remain at current levels well into 2014. The Namibia dollar exchange rate could experience some stability for a while but remains under medium to longer term pressure. At the end of 2013, the following exchange rates are forecast: N$/U$ 8.50; N$/£ 13.75 and N$/€11.20,” he said in his annual year-end address.
The future holds a better promise than the past…
Global policy makers appear better prepared to act to stem any further crisis than in the past. In particular, US policy-makers from across the political spectrum appear to be fast appreciating the dire consequences of the much-publicized “fiscal cliff” if an acceptable solution to current political wrangling is not agreed soon. Whilst the Eurozone is not yet out of the debt-crisis woods, there appears to be sufficient political will to take active steps to limit the problem. The Chinese economy will experience growth, though structurally such growth would stabilize at levels that are somewhat lower than those seen in recent history.
“In Namibia, we have good government policies and a solid fiscal position. Most of our challenges stem from sub-optimal delivery in the public system. If we focus on rigorous policy implementation, monitoring and performance management, we should do well in 2013 and beyond.”
As Barack Obama recently stated, ‘We are the ones we’ve been waiting for. We are the change that we seek.’ Now is the time to reflect and learn so that when we breach the New Year we are ready, nationally, as corporates and individually, having apprised ourselves of our context and positioned ourselves well to exploit opportunities that present themselves.
After substantial volatility in 2011, some calm returned to global markets in early 2012. This was largely due to better than expected data out of the USA and a seemingly more aggressive European Central Bank (ECB) which cut interest rates twice late in 2011 and injected vast amounts of cheap money into the European banking system.
The Federal Reserve Board (Fed) in the US also extended its low interest rate guidance further – from ‘rates at present levels to mid-2013′ to ‘late-2014′ and later ‘into 2015′. This more optimistic period lasted for a few months as macro data performed better than feared and Greece completed a €100 billion privately-held debt write-off – improving sentiment around the Euro-area debt crisis at the time.
Unfortunately, this calm was short-lived as previously identified global risks gained renewed prominence from March/April onwards. Firstly, the Eurozone debt crisis came to the fore sharply again as concerns were raised that Spain, and even Italy, might need bailouts.
Secondly, data out of China from about March onwards pointed to a further slowdown in this key economy. This impacted heavily on commodity exporters such as Namibia and South Africa. Thirdly, the US “fiscal cliff” concerns gained momentum as the year progressed. The “fiscal cliff” refers to legislated fiscal changes which will come into effect on 1 January 2013. These changes include a package of tax increases and expenditure cuts with a total impact of over $800 billion, or 4.5% of the US Gross Domestic Product, which will certainly affect markets beyond the US.
!Gawaxab said Namibia weathered the global storm pretty well and the national budget was well-received with the TIPEEG intervention featuring prominently, whilst NDP4 was successfully launched during the second half of the year.
He said that the key objectives of NDP4 are commendable and motivating, and include high and sustained economic growth, an increase in income equality and employment creation.
“Unfortunately, the last four months of the year were characterized by a host of unprotected strikes, largely in the public sector and the State-owned enterprises arena. These protests and demonstrations were largely for salary increases and improved service delivery, and in some circles were seen as manifestations of deep-seated social inequalities.”
He said in order to ensure that Namibia learns from these events, “we clearly have a labour absorption problem that needs urgent attention.”
“A major re-think of labour laws is required as these relate to productivity, and there is an urgent need to implement youth employment interventions,” he said.
!Gawaxab said the TIPEEG infrastructure expansion programme needs to gather pace sharply and quickly and in order to ensure success, flawless execution and tight monitoring of the approved projects will be required.
“Two key structural obstacles to Namibia’s prosperity are the obsolete doctrines that clutter the minds of man, and a lack of execution of policy interventions,” he warned.
By Business Reporter
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