Best hope lies in economic transformation – Schlettwein

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Eveline de Klerk

Walvis Bay-Finance Minister Calle Schlettwein says Namibia should focus on economic transformation, regional integration, and leveraging of regional and global value chains. He made the observation during a mid-year budget review stakeholder meeting held in Walvis Bay with business leaders on Friday morning.

According to Minister Schlettwein, as a small and open economy, Namibia’s best hopes lies in economic transformation and regional integration.

“Timely policy interventions to improve the productive capacity of the economy and diversify economic activities are therefore critical. We need to improve the range of finished goods Namibia can trade within Southern Africa as well as the whole of Africa,’’ the finance minister said.

The breakfast meeting allowed for constructive engagement on measures proposed in the Budget Review and to streamline private sector input as regards the implementation modalities of these economic interventions.
Schlettwein said emerging markets and developing economies lead global growth with an output rate at 4.5 and 4.9 percent for 2017 and 2018, respectively, due to positive growth in China and India.

He noted that world trade volumes are also projected to improve, while non-fuel commodity prices are projected to taper off in 2018, after a moderate recovery in 2017.

“The sub-Saharan African region also anticipates gradual growth take-off, with the growth rate estimated at about 2.6 percent for this year and 3.5 percent in 2018. For Namibia, the growth outlook for South Africa and Angola is important.” South Africa projected economic growth at 0.7 percent in 2017 and 1.1 in 2018, up from 0.3 percent last year, while Angola’s growth is projected at about 1.5 percent in 2017 and 1.6 percent in 2018, Schlettwein explained.

These contrasting growth dynamics across economic regions, he said, have definite implications for Namibia, given that the global upswing augurs well for international trade and for Namibia as an exporter of non-mechanised goods, he noted. Schlettwein said the low growth spell in Angola and South Africa placed a squeeze on Namibia, which stems from weak trade and low external demand. According him, Namibia is already contending with the tightening squeeze on potential SACU revenue, which is anticipated to decline by about 10 percentage points next year.

“These dynamics crystallise the challenges of small, open economies such as Namibia in an increasingly integrated and globalised economy. A soft landing for large trading partners often leads to a hard landing for the small economy.

“Therefore, it is necessary that Namibia focuses on economic transformation, regional integration and leveraging of regional and global value chains,” he told the meeting.

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