Business climate weakening

Business climate weakening 17 indicators show deterioration Core indicators in the IJG Business Climate Monitor continue to point towards a contraction in the local economy in 2016 when compared to 2015. STAFF REPORTER



The IJG Business Climate Monitor fell by 0.94 points in September 2016 to a level of 51.34 points. This tick down follows the first upward move seen on the index since February 2016 and suggests a continuation of the weakening business climate in the country.

“Of the 31 indicators measured by the index, 17 showed deterioration over the past year while the remaining 14 indicators showed improvement,” the Institute for Public Policy Research (IPPR) says.

Said the IPPR: “As has been the case throughout the year, many of the core indicators in the index continue to point towards a contraction in activity in the local economy in 2016 when compared to 2015.

“This is driven by a number of factors, including the weakening external position driving down demand for Namibian commodities and therefore commodity prices, as well as the drought and a number of home-grown challenges.

“From a policy perspective, major cuts in government expenditure and increasing interest rates continue to put the brakes on the local economy, which when combined with the external environment means the slow-down has been accelerated by macroeconomic policy decisions.”

The IPPR found that monthly government expenditure was down by 6.9% in September 2016 when compared to the same period in 2015, while at the same time interest rates are up 50 basis points on their September 2015 levels, reflecting a 4.9% increase in rates.

“Many other indicators look similarly bleak, with most sectors showing sizable contractions. In this regard, the high frequency data is unquestionable, the Namibian economy has contracted thought 2016, when compared to 2015. However, many sectors will bounce back fairly quickly should the external environment improve and should we see significant rainfall,” the IPPR said.