Business confidence doesn’t equal jobs

JOB prospects for the large reserve of jobless Namibians are not set to change for the remainder of the year, although major companies remain optimistic about the economy in the face of global financial turmoil and a predicted recession.

The Quarterly Business Confidence Survey released by the Institute of Public Policy Research (IPPR) yesterday said “although general outlook [of companies] was positive, this did not automatically translate into plans to employ more workers and make capital investments”. This, according to IPPR, is indicative of a general sense of caution about the negative impact from the world economic crisis, which has not yet been fully felt in Namibia.While the retail sector is optimistic about the fourth quarter, major mining houses and banks “felt the pinch (third quarter) as operational costs increased and a reduction in credit extension spoilt the party”.Profit margins of mining companies are particularly under pressure as a result of increases in operational costs because of electricity tariff and fuel price increases.Lately, commodity prices have seen a downward spiral as major economies and importers of these products have cut back their demand.”Several of the larger mines predicted worse business conditions in the fourth quarter and a consequent reduction in revenue.”Although the outlook for uranium looks positive, “much will depend on the fate of commodity prices in the next months”, the report says.Generally respondents interviewed for the confidence survey indicated that they do not expect major changes in business conditions in the fourth quarter than the experiences in the third quarter.Despite the international turmoil, local companies believe that the Namibian economy will show resilience “against a backdrop of looming global recession”.Forty-three of the respondents said they expected employment figures to remain unchanged, while eight businesses indicated that they would reduce their workforces.”Interestingly, the sectors that envisage a busy fourth quarter did not indicate they plan to hire more labour,” the report says.This, according to IPPR, could be linked to the seasonal nature of these businesses and the expected improved business conditions, “which will not necessarily be sustained into the new year”.Although the agriculture sector had been generally subdued, the outlook in the fourth quarter for grape producers is positive as the harvest season approaches.The slowdown in economic activity in the agricultural sector is also felt by agricultural implements suppliers, who are not very optimistic about the fourth quarter.But all is not gloom and doom, as commodity exporters such as mining and agriculture can expect a profit windfall because of the depreciating value of the rand.This, according to IPPR, is indicative of a general sense of caution about the negative impact from the world economic crisis, which has not yet been fully felt in Namibia.While the retail sector is optimistic about the fourth quarter, major mining houses and banks “felt the pinch (third quarter) as operational costs increased and a reduction in credit extension spoilt the party”.Profit margins of mining companies are particularly under pressure as a result of increases in operational costs because of electricity tariff and fuel price increases.Lately, commodity prices have seen a downward spiral as major economies and importers of these products have cut back their demand.”Several of the larger mines predicted worse business conditions in the fourth quarter and a consequent reduction in revenue.”Although the outlook for uranium looks positive, “much will depend on the fate of commodity prices in the next months”, the report says.Generally respondents interviewed for the confidence survey indicated that they do not expect major changes in business conditions in the fourth quarter than the experiences in the third quarter.Despite the international turmoil, local companies believe that the Namibian economy will show resilience “against a backdrop of looming global recession”.Forty-three of the respondents said they expected employment figures to remain unchanged, while eight businesses indicated that they would reduce their workforces.”Interestingly, the sectors that envisage a busy fourth quarter did not indicate they plan to hire more labour,” the report says.This, according to IPPR, could be linked to the seasonal nature of these businesses and the expected improved business conditions, “which will not necessarily be sustained into the new year”.Although the agriculture sector had been generally subdued, the outlook in the fourth quarter for grape producers is positive as the harvest season approaches.The slowdown in economic activity in the agricultural sector is also felt by agricultural implements suppliers, who are not very optimistic about the fourth quarter.But all is not gloom and doom, as commodity exporters such as mining and agriculture can expect a profit windfall because of the depreciating value of the rand.