Effects Of Inflation In Namibia

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Inflation is one of the big problems that plague all of the economies. Inflation is a state of price rising, an increase in the overall price level. Inflation may be caused by varieties of factors. It is generally the case that higher level of inflation carries more severe consequences thus it often is the aim at government to sustain a low level of inflation. Inflation effects economic growth and certainty, wages, unemployment, international competitiveness, finance, exchange and interest rate among other things. When there’s an uncertainty of the economics of Namibia, this lead to a lower level of investment as people are not confident enough to invest, an as a result it leads to a low economic growth. The rate of economic growth depends…show more content…
Increases in normal wage in the economy of Namibia increase an excess of productivity, because of their monopolistic bargaining power, become ambitious in their wage claim which may exceed productivity growth. As to labour costs constitutes a large portion of production and distribution costs, such large wage claims may force producers of goods and services to increase producer prices, thereby sparkling off inflation. Normal wage demands are Marjory influenced by the level of inflation as employees pre-emptively seek larger wages, so as to compensate for the erosion of the purchasing power of their normal wage. This can in extreme cases lead to a wage price inflationary spiral that often becomes difficult to break, as wage increases lead to price increases which thus become a constant cycle. The amount that people earned tax free will fall in real terms and the government does not have to necessarily increase public sector worker salaries at a greater rate than inflation so in this way it gains from increased revenue. If the Namibian government do not increase the fixed income at the same rate of inflation than people of fixed incomes such as pensioners will be highly affected. Past studies have found that the rate of inflation tends to be more volatile since to the poor, largely because they have historically spent more of their income on basic needs, which tends to see bigger price swings…show more content…
Unemployment is the condition where people are jobless causing changes in a county’s economy. According to the investigation into the Philips curve of Namibia (Ogbokor 2005), there’s an inverse relationship between inflation and unemployment. The unemployment leads to negative economic situations that’s leads to the deterioration of skills, increase in debt and anti-social behaviour. When unemployment rate is high, the crime rate increases as people find ways to survive and this affects the safety of the society. On the other hand, a lot of resources are wasted during inflation. For example, during the inflation period companies have a lower demand rate and have a high wastage on raw materials due to people saving more money and spending less. The main way of reducing the unemployment are affecting the supply and

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