Big brother’s watching
The global economy is expected to grow at a much slower rate of 3.5%. Much lower than the 4.5% estimated earlier by the IMF, the estimates propose a gloomy horizon yet again for the world economies.
Economy Watch, which is a quarterly compilation of economic data by the Institute of Public Policy and Research, highlighted that the Eurozone is still under recession with growth levels of -0.2%. Germany’s economy, although subdued, still stands aloof of the impeding crisis with growth levels of 0.6%. The Asian economies remain key drivers of global growth with China expected to grow by 8.2% and India at 5,9%. From the African continent Sub-saharan Africa is expected to grow at 5.8%. 0.3 basis points higher than was initially planned.
Namibia’s growth for 2012 was recently announced at 5% by the Namibia statistics agency as a result of increased output from the mining sector specifically diamond and uranium. Annualised inflation rates seem to be on an upward trend from 2010. Food and non alcoholic beverages, which are a large subset of the total composite basket, have been the main drivers for inflation. According to Economy Watch, inflation in 2013 has been mainly influenced by food and housing. The report further added, “the decline in inflation rate in February to 6.2% from 6.8% in January 2013 was most likely temporary and does not herald a slowdown in price increases.”
At a sectoral level, uranium prices have not recovered fully from the Fukushima accident of 2011. The prices ended 15.9% lower in 2011 and have lost another 2.0 % since the beginning of 2013. Gold on the other hand has gained some 8.3% during 2012 and stands at US $ 15181.75 per fine ounce. Currently speculators are working on the premise that the acceleration in economic recovery in places like USA could lead to growing demand for gold by the jewellery industry which accounts for almost half of total demand. Consumers in Namibia are facing a tough time in terms of the price of black gold. Oil went up by an estimated 11.3% in 2012 and is expected to further rise by 5.7%. The impact in Namibia can be attributed mainly to the depreciating value of the Namibian dollar. According to the report the depreciation is a result of investor sentiments in South Africa following the labour unrest and a widening current account deficit.
Revenue for Namibia is expected to increase by 8.2 % during the current financial year. The revenue growth is relatively modest and is apparently a result of declined receipts from SACU revenue pool which account for 37 % on the total revenue. Expenditure is expected to increase by 10%. With ministry of education getting a large portion of the lion’s share. Since revenue is not keeping up with expenditure, the budget deficit is expected to increase to 6.4 % which is approximately N$ 7.4 billion.
In conclusion the report stated, “What counts, however, at the end of the day is not the budget deficit or the level of debt stock, but the quality of the spending and its return to the economy and its citizens”