ppt namibia worldeconomy Standardbank

Namibia and the world economy: 

Namibia and the world economy 16 September 2005 Philip Clayton Windhoek 15 March 2007 A longer term and regional perspective

Namibia: 

Namibia

Slide3: 

Namibia: fiscal health (% of GDP) Source: EIU Namibia report

Slide4: 

Doing business: good in a regional context Source: IFC Doing Business Starting a Business Dealing with Licenses Employing Workers Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business

Slide5: 

Growth – OK, but could do better Source:World Markets

Slide6: 

Government spending: Namibia out of line Source:World Markets Burden of government high. Public sector share of formal employment out of kilter with region. Need to focus on bang for tax buck Government suggests 2009/10 spending at 29.7% of GDP

Slide7: 

Deficit: much work still to be done Source:World Markets Revenue can be very variable – fishing, diamonds SACU. Need to look for new sources, while keeping overall burden low. Need to assess value of spending Government pencilling in deficit of 1.1% of GDP over MTEF

Slide8: 

Share of revenue, revised 2006/07 Source: EIU Two fifths of revenue – SACU transfers – will be under pressure in real terms

Slide9: 

SACU payments, as % of SA revenue Source: SA National Treasury

Tax payments and compliance: 

Tax payments and compliance Source: PWC

Corporate Tax : 

Corporate Tax Corporate income tax, labour tax, and other taxes, Source: PWC

Individual Tax – highest rate : 

Individual Tax – highest rate Source: Worldwide-Tax.com Monaco 0% Singapore 21% Namibia 35% SA 40% Norway 51%

Today’s Budget: Balance sheet - positives: 

Today’s Budget: Balance sheet - positives Pro poor – tax threshold up 50%, to N$36 000 pa, pension allowance up 33% to N$40 000; Grants for 78 000 children over MTEF Education 22.2% of spending in MTEF (bang for buck?).Continued stated focus on growth Budget surplus this year of 2.1% of GDP (but specials influence this). In MTEF, expenditure projected to decline to 29.7% of GDP, from 34.2% IN 06/07 Development budget up further $800m under MTEF Debt management improved – prevents lumpy redemptions Focus on tax compliance – revenue and grants 36.3% GDP in 2007/08

Today’s Budget: Balance sheet - negatives: 

Today’s Budget: Balance sheet - negatives Rising operational expenditure – 77.7% of total in 06/07, to 82.1% in MTEF. Need is to improve capital stock; looks like economic services gets only 11% Short on details regarding underperforming parastatals – particularly Air Namibia (and is this subsidy pro-poor?) Loan funding – even if concessional – to plug hole in revenue. But deficit at 1.1% of GDP over MTEF is sustainable. But, is the decline in share of GDP on government consumption - and declining real spend pegged at $17bn or so for three years - realistic? Massive underspending on development budget in 06/07 thus far – suggests capacity constraints. Will this continue? Burden of state on economy not addressed (but perhaps not just Minister’s job)

Budget conclusion : 

Budget conclusion Within tough constraints, Minister has done a good job. Focus on poor, job creation, transforming the economy – all to be applauded. Thrust of focus on indigenising investment – on unlisted companies, and decreasing share of dual listed that counts – a positive sentiment. But – concern regarding unintended consequences (misallocated capital; another building bubble, etc) eed critical look at development, and particularly job creation, obstacles. It is not only the measured tax burden that is at issue; the unmeasured regulatory and other compliance is also an obstacle. With the constraints – a good job. But, need to focus on diversifying revenue; looking critically at all what government does (a third of formal sector works for the state). MTEF process a good start. With vision – Namibia can achieve a better life for all – despite the tough periods it has gone through

Global context: 

Global context

Emerging markets – now pushing ahead: 

Emerging markets – now pushing ahead Sustainable thrust Source: IMF

Slide18: 

International issues affecting southern Africa Emerging market sentiment shifts – global risk shifts Commodity demand and prices (China key) Middle East, Iraq North Korea Zimbabwe United States and recession; global housing market GLOBAL ENVIRONMENT REMAINS SOMEWHAT UNSETTLED

Slide19: 

Population trends – median age Population dynamics moving absolutely – and relatively – in favour of Africa, Latin America, Asia – against developed world Source: Group Economics (from UN World Population Prospects)

China and India: 

China and India China and India together, account for two fifths of the world’s population. And greater region (with Indonesia, Vietnam, etc), over half China has been growing at 10% pa for two decades; the Hindu giant has begun stirring Demand for commodities is huge. High value agriculture imports likely to surge (in similar fashion to China shifting from oil exporter, to second-biggest importer). China now exporting inflation – not deflation: thanks to impact on commodities, and small – but significant – revaluation of Renmimbi. Also, labour costs pushing up even manufactured prices Note increasing influence of China, and India, in African investments

China’s demand, commodity prices: 

China’s demand, commodity prices Does the China, India effect mean the boom will last much longer than average? Source: Economist, 22 July 2006

Slide22: 

Africa and global growth Long-term uptick in Africa’s performance - but still below Asia Source: IMF World Outlook, April 2006

South Africa: 

South Africa

Economic growth: 

Economic growth Sustainable step-lift? Source: SARB, Standard Bank Group Growth sustainable – Shift from consumption, to uptick in capital spending (private sector and government). Concern is the skills gap; AIDS. Good fiscal policies opening up ability to spend more on social issues

Fixed investment: 

Fixed investment The big dig Source: Standard Bank Group, SARB

Inflation: 

Inflation Structurally lower Source: SARB, Standard Bank Group Exchange rate Global inflation and competition Credible inflation target framework Capacity utilisation Vulnerable to external shocks, especially exchange rate

Economic forecasts: 

Economic forecasts Growth and inflation outlook benign, but talk about bottlenecks rising. Not sure I am as positive on rand as group is. Source: Standard Bank Group 28 February