ppt-namibia-worldeconomy-standardbank.ppt

World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4
World economy charts case

World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4study presented by a Big 4

1. September 2004
Namibia and the world economy
16 September 2005
Philip Clayton
Windhoek 15 March
2007
A longer term and regional perspective

2. 2
Namibia

3. 3
Namibia: fiscal health (% of GDP)
Source: EIU Namibia report-10
0
10
20
30
40
50
Y2002Y2003Y2004Y2005Y2006Y2007Y2008
Budget revenue
Budget expenditure
Public debt
Budget balance

4. 4
Doing business: good in a regional context
Source: IFCCountry
Ease of
Doing
Business
Rank
Singapore 1
New Zealand 2
United States 3
Ireland 10
Lithuania 16
Estonia 17
Malaysia 25
South Africa 29
Namibia 42
Botswana 48
Swaziland 76
Mozambique 140
Zimbabwe 153
Angola 156
DRC 175

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

5. 5
Growth –OK, but could do better
Source:World MarketsGDP growth
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
200220032004200520062007200820092010
World
Sub-S Safr
Namibia
South Africa 2011-36
World 3.1
Sub-S Safr 5.0
Namibia 4.7
South Africa 6.0

6. 6
Government spending: Namibia out of line
Source:World Markets20.0
22.0
24.0
26.0
28.0
30.0
32.0
34.0
36.0
38.0
200220032004200520062007200820092010
World
Sub-S Safr
Namibia
South Africa
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

7. 7
Deficit: much work still to be done
Source:World Markets2011-36
World -0.2
Sub-S Safr 0.4
Namibia -4.7
South Africa 2.4 -8.0
-7.0
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
200220032004200520062007200820092010
Deficit to GDP
World
Sub-S Safr
Namibia
South Africa
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

8. 8
Share of revenue, revised 2006/07
Source: EIUOther revenue
Customs & excise
Two fifths of revenue –SACU transfers –will be under
pressure in real terms

9. 9
SACU payments, as % of SA revenue2.00
2.50
3.00
3.50
4.00
4.50
5.00
5.50
20 00. /0 1 20 01. /0 2 20 02. /0 3 20 03. /0 4 20 04. /0 5 20 05. /0 6 20 06. /0 7 20 07. /0 8 20 08. /0 9 20 09. /1 0
Source: SA National Treasury

10. 10
Tax payments and complianceTax
payments
per year
Time to
comply
Belarus 123 1188
Namibia 34-
Botswana 24 140
South Africa 23 350
Mauritius 7 158
Norway 3 87
Source: PWC

11. 11
Corporate Tax
Corporate income tax, labour tax, and other taxes, Source: PWCMauritius 24.8
Namibia 25.6
Hong Kong 28.8
South Africa 38.3
Botswana 53.3
Total tax rate as % of
commercial profits

12. 12
Individual Tax –highest rate
Source: Worldwide-Tax.com
Monaco 0%
Singapore 21%
Namibia 35%
SA 40%
Norway 51%

13. 13
Today’s Budget: Balance sheet -positives
Propoor–taxthresholdup50%,toN$36000pa,pensionallowanceup
33%toN$40000;Grantsfor78000childrenoverMTEF
Education22.2%ofspendinginMTEF(bangforbuck?).Continuedstated
focusongrowth
Budgetsurplusthisyearof2.1%ofGDP(butspecialsinfluencethis).
InMTEF,expenditureprojectedtodeclineto29.7%ofGDP,from34.2%IN
06/07
Developmentbudgetupfurther$800munderMTEF
Debtmanagementimproved–preventslumpyredemptions
Focusontaxcompliance–revenueandgrants36.3%GDPin2007/08

14. 14
Today’s Budget: Balance sheet -negatives
Risingoperationalexpenditure–77.7%oftotalin06/07,to82.1%inMTEF.
Needistoimprovecapitalstock;lookslikeeconomicservicesgetsonly
11%
Shortondetailsregardingunderperformingparastatals–particularlyAir
Namibia(andisthissubsidypro-poor?)
Loanfunding–evenifconcessional–toplugholeinrevenue.Butdeficitat
1.1%ofGDPoverMTEFissustainable.But,isthedeclineinshareof
GDPongovernmentconsumption-anddecliningrealspendpeggedat
$17bnorsoforthreeyears-realistic?
Massiveunderspendingondevelopmentbudgetin06/07thusfar–
suggestscapacityconstraints.Willthiscontinue?
Burdenofstateoneconomynotaddressed(butperhapsnotjustMinister’s
job)

15. 15
Budget conclusion
Withintoughconstraints,Ministerhasdoneagoodjob.Focusonpoor,job
creation,transformingtheeconomy–alltobeapplauded.
Thrustoffocusonindigenisinginvestment–onunlistedcompanies,and
decreasingshareofduallistedthatcounts–apositivesentiment.But–
concernregardingunintendedconsequences(misallocatedcapital;another
buildingbubble,etc)
eedcriticallookatdevelopment,andparticularlyjobcreation,obstacles.It
isnotonlythemeasuredtaxburdenthatisatissue;theunmeasured
regulatoryandothercomplianceisalsoanobstacle.
Withtheconstraints–agoodjob.But,needtofocusondiversifying
revenue;lookingcriticallyatallwhatgovernmentdoes(athirdofformal
sectorworksforthestate).
MTEFprocessagoodstart.Withvision–Namibiacanachieveabetterlife
forall–despitethetoughperiodsithasgonethrough

16. 16
Global context

17. 17
Emerging markets –now pushing ahead
Sustainable thrust
Source: IMF%
0
1
2
3
4
5
6
7
8
9
1970197319761979198219851988199119941997200020032006
World GDP growth Advanced economies Developing economies

18. 18
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

19. 19
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)10
15
20
25
30
35
40
45
50
19501960197019801990200020102020203020402050
Europe
Northern
America
Asia
Latin America
and the
Caribbean
Africa

20. 20
China and India
ChinaandIndiatogether,accountfortwofifthsoftheworld’spopulation.
Andgreaterregion(withIndonesia,Vietnam,etc),overhalf
Chinahasbeengrowingat10%pafortwodecades;theHindugiant
hasbegunstirring
Demandforcommoditiesishuge.Highvalueagricultureimportslikely
tosurge(insimilarfashiontoChinashiftingfromoilexporter,tosecond-
biggestimporter).
Chinanowexportinginflation–notdeflation:thankstoimpacton
commodities,andsmall–butsignificant–revaluationofRenmimbi.
Also,labourcostspushingupevenmanufacturedprices
NoteincreasinginfluenceofChina,andIndia,inAfricaninvestments

21. 21
China’s demand, commodity prices
Does the China, India effect mean the boom will last much longer than average?
Source: Economist, 22 July 2006

22. 22
Africa and global growthGDP growth pa
0
1
2
3
4
5
6
7
8
9
World Africa Dvlping Asia
1988-97
1998.-07
Long-term uptick in Africa’s performance
-but still below Asia
Source: IMF World Outlook, April 2006

23. 23
South Africa

24. 24
Economic growth
Sustainable step-lift?
Source: SARB, Standard Bank Group-4
-2
0
2
4
6
8
1960196419681972197619801984198819921996200020042008
% y/y
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

25. 25
Fixed investment
The big dig
Source: Standard Bank Group, SARB-2
0
2
4
6
8
10
1960s 1970s 1980s 1990s 2000s
% y/y
General government Public corporations Private business enterprises

26. 26
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 rate0
4
8
12
16
20
1982198519881991199419972000200320062009
% y/y
CPI CPIX

27. 27
Economic forecasts
Growth and inflation outlook benign, but talk about bottlenecks rising. Not sure I am as
positive on rand as group is.20022003200420052006200720082009
GDP (% y/y) 3.7 3.1 4.8 5.1 4.7 4.3 4.2 4.3
Cons exp by hshlds (% y/y)3.2 3.5 6.7 6.6 6.9 5 4.5 4.7
Gross fixed capital (% y/y)3.7 9.1 9.6 9.6 11 9 9 10
Current acc bal (% of GDP)0.6 -1.3-3.4-4.2-5.6-5.1 -5-4.9 20022003200420052006200720082009
Headline CPI (% y/y) 9.2 5.8 1.4 3.4 4.6 5.3 4 4.5
CPIX (% y/y) 9.3 6.8 4.3 3.9 4.6 5 4.9 4.7
PPI (% y/y) 14.2 1.7 0.5 3.1 6.9 7.4 6 5
Prime (ave) 15.6 1511.310.611.212.411.2 11
$/R (ave) 10.547.556.436.336.77 7.27.117.42
Source: Standard Bank Group
28 February