Economy at Large The Economy: Sustainable Options

AUTHOR: David Jarrett and Team Editor@ RDJ Publishing and RDJ Group ChiefExecutiveOfficer

Courtesy:SouthAfricanReserveBank

The fluctuations of the South African Rand have profound implications for the Namibian economy, particularly concerning inflation dynamics. Given the close economic ties between the two countries, policymakers in Namibia need to closely monitor exchange rate movements and adopt appropriate monetary and fiscal measures to mitigate the impact of currency fluctuations on inflation and overall economic stability

Economies are fragile and need to be always nurtured as well as created with a mix of sectors that provide sustainable development. Sustainable business practices thus are the lifeblood and need to be understood widely by all in it Any country will out of necessity for its survival and growth trajectory, defend its economy through various initiatives to satisfy healthy ecosystems while enhancing development

Another factor affecting an economy is its macro-economic environment shaping the trajectory of an economy. It encompasses a broad array of factors, including fiscal and monetary policies, inflation rates, exchange rates, and overall economic stability In the intricate web of economic dynamics, the macroeconomic environment stands as a cornerstone determinant of a nation's economic health. Its impact reverberates across various sectors, influencing consumption patterns, investment decisions, and overall economic stability

A depreciation of the Rand tends to increase the cost of imports denominated in foreign currencies, leading to higher prices for imported goods in Namibia. This, in turn, can contribute to inflationary pressures within the Namibian economy, impacting the cost of living for consumers and eroding purchasing power The Bank of Namibia, Namibia's central bank, often responds to exchange rate movements to maintain price stability and support economic growth. Exchange rate volatility between the Rand and the Namibian Dollar also impact investor sentiment and capital flows into Namibia

Another macro impactor for the Namibian economy is fuel (petrol/diesel) and the model for pricing also sends signals throughout the economy. In Namibia, the price of fuel is primarily determined by a combination of international oil prices, exchange rates, government taxes, and transportation costs Notable is that the country does not refine fuel and so fuels are imported leading to a basic fuel price based on landed costs that fluctuate as stated earlier through international pricing signals

Featuring highly, is electricity and the impact its’ availability has on economic development. The Electricity Control Board (ECB) of Namibia in its 2022 Statistical Bulletin point to a reduced electricity intensity versus Gross

Domestic Product (GDP)which is a very good sign, noting retooling and improved energy efficiency approaches It can also be an indication of increased use of rooftop solar systems, thus reducing the demand on the national grid. The ultimate benefit to the economy occurs by the reduction through the use of energy efficiency or renewable energy technologies (including battery energy storage systems) in what would have been additional imports of energy, thus reducing the impact on Namibia’simport(balanceof)paymentsreducingdeficits.

With the advent of commercially available e-mobility and rooftop systems amongst other options, can be used to increase GDP and reduce balance of payment deficits thus reducing zig zag inflation As always, the conversation continues infocus@rdjpublishing.africa

Readings: https://hbr org/2011/10/the-sustainable-economy https://namibiafactcheck org na/news-item/explainer-whatdetermines-the-fuel-price-in-namibia%EF%BF%BC/ https://www paperpublications org/upload/book/The%20Impact%20 of%20Electricity%20Power-30062022-3 pdf https://www npc gov na/wp-content/uploads/2023/06/Balance-ofPayments-Policy-Brief-2015.pdf https://www resbank co za/en/home/what-we-do/statistics/keystatistics/selected-historical-rates

Courtesy:ElectricityControlBoard2022