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Old 08-08-2018, 06:25 PM
Cool_Guy1 Cool_Guy1 is offline
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Economic Outlook for 2018 - An independent perspective

From my analysis, so far for 2018, the economy still remains depressed, growing below trend growth with an appreciated real exchange rate, resulting in low inflation outcomes. We are now into August and there is no sign of improvement, as key growth stimulants don't show any sign of recovery, hence my forecast is for the economy to remain below trend growth for the whole of 2018. Why do i say that?
1. International commodity prices on average have not recovered fully.
2. Due to low international commodity prices, export of agricultural commodities in volume terms have declined and have yet to recover. This is due to, switch by small holder growers from depending on agricultural export commodities like coffee to growing kaukau which is earning them big bucks.
3. The resulting effect of points 1 and 2, stuffed off foreign exchange flows and hence resulted in the shortage of foreign exchange in the market.
4. Other contributing factor to the shortage of foreign exchange in the market has been the Governments so-called Tax Credit Scheme to the extractive industries. Instead of collecting tax in foreign currencies, the Government decided to advance those to construct stadiums, roads etc and stuffed off any tax collection, hence shortage of foreign currency.
5. Continuous shortage of government funds to fund its operations due to point 4. Further, the economic environment does not warrant for expansion of business, hence additional taxation sources have dried up.
6. With shortfalls in revenue Government continues to borrow, and it is increasing on a weekly basis.

On a positive note, the APEC meeting should bring in some money but, that would not be enough to compensate and enhance economic growth surpassing trend growth.

I would therefore conclude that, this year 2018, economic growth will be below trend hence a depressed economy. People are talking up the economy, but, it will still remain depressed for the year.
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