Turbulence ahead

The Namibian economy can expect a growth of between 3.5% and 4.0%, according to Johannes !Gawaxab, managing director of Old Mutual Africa’s Operations.
!Gawaxab says the two-speed world phenomenon will continue this year – slow to no growth in the developed economies and faster growth in the emerging markets.
“In the developed economies we expect to see marginally negative growth in Europe, flat growth in Japan and some positive growth in the USA. In the emerging markets we expect economic growth to range from 5% to 8%. In the RSA we think growth will be in the region of 2.5% to 3.0%,” he said.
He further said the main positive factors for economic growth in Namibia will continue to be low interest rates, which generally support consumers and businesses, firm growth in government expenditure and increased activities in the mining sector.
“As far as inflation is concerned, fears of sharply rising inflation have subsided of late. With soggy growth in the developed world and inflation in the emerging markets already declining somewhat, we expect inflation in Namibia to remain around the current 6% to 7%, on average, over the year. Inflation has accelerated sharply towards the end of 2011 – the number for December came in at 7.2%, but we do not expect it to accelerate much from here,” said !Gawaxab.
Asked on the challenges the economy will be facing this year, he said: “In and amongst all the challenges Namibia faces, we think a major one is unemployment. Namibia will continue to face challenges on how to absorb more workers into the mainstream economy, lifting people out of poverty and giving everyone a decent standard of living.”
He encouraged all the participants in the Namibian economy and other citizens especially to look upon all the challenges the country is faced with and see the opportunities embedded in them.
On the issue of TIPEEG, !Gawaxab said: “In an economy suffering from high unemployment, in fact of ‘crisis’ proportions, with estimates ranging from 35% to 50%, one should expect drastic measures to be taken. In the USA, for instance, the unemployment rate is around 9%, in Europe around 10% and in Japan around 5%. These countries keep interest rates close to zero in order to reflate their and the world’s economies. Fiscally these countries are stretched to the limit, that is, they are not really in a position to use fiscal policy to stimulate their economies. Were it not for that, they would have used fiscal policy (cut taxes and increase spending).
“In Namibia’s case we are fortunate therein that our fiscal position is relatively healthy and therefore these kinds of policies (TIPEEG) can be instituted. It will by no means be a complete solution in and of itself, but it will make a significant contribution to economic growth. The caveat remains that in better times, these kinds of spending programmes and fiscal stimulation should be reigned in as the economy recovers, in order that fiscal over extension such as we currently see in the US and Europe be avoided.
!Gawaxab warned that 2012 will be a turbulent year where global debates and crisis management regarding the debt mountain in the developed world will continue to make everyone nervous.