High inflation, interest rates erode consumer confidence

Tujoromajo Kasuto

Uncoordinated policy frameworks and a lack of cooperation between the public and private sectors, according to the Agricultural Bank of Namibia, are obstacles in the fight against unemployment.

The Bank observes that a number of initiatives aimed at reviving the labour market, such as the youth agro-based value chain initiatives, are halted by the lack of coordination between the government and private sector and other policy frameworks, making it difficult to combat the high unemployment rate.

‘’Pandemic related retrenchments and slow global trade have further worsen the number of unemployed individuals in the country. Employment is the cornerstone of the links between economic growth and social development,’’ Agribank said in its monthly market watch for August.

The bank is worried that consumer confidence is eroded by high inflation rates and rising Interest rates.

This is due to international dynamics which play a major role in the mixed economic indicators, making it burdensome for policy makers to execute effective policies that will arrest the structural and development challenges.

This comes after the Namibian Fiscal Strategy was formulated in March 2021, for the FY2021/22-2023/24 and was aimed at reviving economic growth and rebuilding fiscal buffers that have been decimated by years of recession and worsened by the Covid-19 Pandemic.

Between 2010 and 2015, the overall economy grew by an average of 5.4%, largely due to exceptional expansion in the secondary and tertiary sectors.

The contraction of the construction sector, the effects of the nationwide drought, and the closure of some wholesale and retail locations caused by the pandemic in 2020 resulted in the average decline of 1.9% between 2016 and 2020.

In spite of the declining revenue coffers, the government’s plan to resume growth prior to 2016 is still in place.

Agribank notes that the growth revival plans hinge on the expected recovery in the agriculture and forestry sector (better rain and rising forestry activities) coupled with a robust growth in the mining sector.

Thus, according to Bank of Namibia, overall growth is expected to average at 2.7% between 2022 to 2023.

BoN’s estimate follows Namibian Inflation, hitting record high by soaring to 6.8% in July 2022, an increase from 4% recorded in the same period in 2021, the biggest yearly increase since July 2017.

By Observer