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Tougher economic conditions ahead: Economist
A top economist last week warned that tougher economic times are
ahead for corporates.
Speaking at the 28th National Conference of Chartered Accountants,
consultant and former Director Policy and Planning, EDB, Lloyd Yapa
warned that with foreign currency depreciation, rising inflation
and increasing interest rates, the buoyancy enjoyed by the economy
may not continue.
“Corporates will feel performance go down because we are not
doing anything long term,” Yapa said, at the presentation of
a paper on energising the economic engine.
He outlined the economic goal of increasing income with strong purchasing
power and reducing poverty levels, especially, in rural areas. The
Western Province currently accounts for 50% of GDP. He set out the
objective of increasing economic growth to 10% and reducing poverty
levels from 23% presently, to 12% in 2015.
He pointed out that consumption was zooming due to deficit budgeting
and printing money, while supply was stagnant. “When demand
increases and supply is stagnant, a lot of money is chasing after
a few goods, increasing inflation,” he said. Investment is
28% of GDP compared to 35-40% required for GDP to grow 10%. Other
South East Asian nations have invested two thirds of GDP consistently
for 30 years.
Yapa said that investment may not rise due to the lack of competition
and innovation, corrupt public service, deteriorating law and order
and poor fiscal and monetary policy, He said productivity was low,
especially, in agriculture, where there was no free market in land.
He pointed out that there was poor governance and no political will
to move forward.
He saw opportunities to tap into bountiful capital flows worldwide
and benefit from market opportunities for value added services.
He said there was a need to create an enabling environment for investment
and innovation and increase competition.
Yapa outlined a prospective role for leadership in government, the
corporate sector and civil society. These included a leadership
commited not to political exigency but, with a vision conforming
to people’s aspirations He said there was a need for clear
communication of objectives and strategies, picking assistants with
proven ability and communicating outcomes of strategies to stakeholders.
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